Liberty Global bets $1 billion on Belgium

Liberty Global wants to take full control of its Belgian subsidiary Telenet and is willing to spend US$1 billion to do so.

The telecoms group has tabled a €22-per-share cash offer for all the Telenet shares that it does not already own, or that are not held by Telenet itself.

As of December last year that amounted to over 42 million shares, or a 37.7% stake. Should Liberty Global succeed in picking all of those shares up – and the smart money’s on it managing to do just that – it will pay out €929.9 million, or a shade over US$1 billion.

The offer price represents a premium of 59% on Telenet’s closing price on 15 March and is 52% higher than its volume-weighted average trading price over the preceding month. Those figures, coupled with the fact that the public takeover bid has the support of the Telenet board, must be giving Liberty Global confidence that it will get the deal over the line. Indeed, Bloomberg Intelligence analyst Erhan Gurses tips the bid as “likely to succeed.”

Much has been made of Liberty Global’s previous failed attempt to take full control of Telenet just over a decade ago, but times have changed since then. As Light Reading points out, that takeover offer did not have the support of either the board or minority shareholders, and the price premium was significantly lower than in this new bid.

When Liberty Global announced that it had managed to up its Telenet stake to 58% in January 2013 – it now holds 59.18%, incidentally – the Belgian operator’s share price was hovering between €35 and €36. At the time of writing it was trading at almost €21, having spiked from around the €15 mark before the voluntary takeover bid was announced.

“We believe an offer of EUR 22.00 per share provides a good opportunity for Telenet shareholders to monetize their investment at an attractive premium,” said Liberty Global chief executive Mike Fries.

“We welcome the unanimous decision of Telenet’s board of directors to support and recommend this offer,” he added. “We are proud of how Telenet has evolved in recent years, and we are fully committed to Belgium and all the company’s stakeholders.”

That last point was pretty clear from the very fact that Liberty Global launched its buyout offer, but it is probably worth saying, given that the company has been reshaping its European portfolio in recent years.

The €18.4 billion sale of its cable operations in Germany, Hungary, the Czech Republic and Romania to Vodafone in 2019 left Liberty Global with half a dozen European markets. Since then it has acquired Sunrise in Switzerland and merged its UK operations with those of Telefonica to create Virgin Media O2.

And now it – or Telenet, at least – is being pitched as a serious contender in Belgium.

Earlier this week the European Commission described Telenet as “a reputable player with a proven track record on the fixed and mobile telecommunications markets.” Essentially, it views Telenet as the answer to competition concerns raised by Orange’s planned takeover of Voo, which Brussels has now approved, largely thanks to a network-sharing deal brokered between Orange and Telenet.

Telenet has an opportunity for growth in Belgium and Liberty Global clearly wants in on the ground floor.

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