Cable company Liberty Global is to buy Virgin Media for $23.3bn (£15bn), which will see the US business move aggressively into the European telecoms market.
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The deal will lead to the creation of a powerful global communications company, covering 47 million homes and serving 25 million customers across 14 countries, said Liberty in a statement. Virgin's mobility and business-to-business (B2B) expertise offer significant additional growth potential in key markets, it added.
Mike Fries, CEO of Liberty Global, said the deal meant 80% of Liberty Global's revenue will come from five countries – the UK, Germany, Belgium, Switzerland and the Netherlands.
"Virgin Media's market-leading innovation and product expertise, particularly in mobile and B2B, will accelerate our own development of these business segments,” he said.
Virgin Media CEO Neil Berkett said: “The combined company will be able to grow faster and deliver enhanced returns by capitalising on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.”
Quocirca analyst Rob Bamforth said the deal will create a strong rival to incumbent BT – a move which could benefit business through greater competition.
Despite Virgin Media's struggle to turn a profit and existing debt, the deal could be valuable for Liberty as it will acquire a strong customer base and existing infrastructure investments. He added that mobile and B2B were among the strongest areas of Virgin Media’s business.
“The UK is a good market, both in its own right and with its links to the rest of the Europe. There’s a lot of opportunity still and an interesting competitive landscape. There has been a sense for some time that the market has been waiting for a real rival to BT,” said Bamforth.
As part of its acquisition of Virgin Media, Liberty Global will relocate from Delaware to the UK by becoming a UK Plc. This will have several business and financial benefits, including increased strategic and financial flexibility.