John Malone's Liberty Global is preparing to make a bid for Virgin Media, the UK cable operator with an enterprise value of more than $20 billion, in a deal that would mark the U.S. billionaire's biggest move yet into the UK and could set up a fresh clash with his former partner and rival Rupert Murdoch.
A bid could be announced in the coming days, according to several people familiar with the situation, and would come more than five years after Liberty Global first considered buying Virgin Media, in which Sir Richard Branson's Virgin Group still has a 3 percent stake.
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A successful bid for the UK's second-largest pay television operator would put Mr. Malone in direct competition with market leader BSkyB, which is controlled by Mr. Murdoch's News Corp. Virgin Media also offers telecoms services.
Mr. Malone and Mr. Murdoch have been both partners and competitors over the years. In the middle of the last decade, Mr Malone amassed an 18 percent holding in News Corp, the largest stake after Mr Murdoch, then swapped it for News Corp's interest in DirecTV, the U.S. satellite business.
Shares in Virgin Media, listed on the Nasdaq in New York, closed at $38.69 on Monday, giving the company a market capitalization of $10.4 billion. Its net debt was 5.7 billion at the end of the last quarter.
The deal has not been finalized and could still fall apart. Liberty Global and Virgin Media declined to comment.
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In November 2011, soon after the phone-hacking scandal forced News Corp to drop a bid for full control of BSkyB, Mr. Malone told the Financial Times that bankers had tried to "stir things up" but he would not bid against Mr. Murdoch for BSkyB.
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"In all the transactions we have done with him he has had the greatest integrity, [so] I am not about to jump and give him a hard time," he said then. But he said he "would love" to be in the UK, and argued that cable companies would gain market share from satellite platforms as internet video services grew.
At its third-quarter earnings in November, Liberty Global reported liquidity of $5.5 billion, including $3.3 billion in cash on its own books and at its parent company's level. Part of that cash was committed to a $1 billion buyback program. Liberty Global recently increased its stake in Belgium's Telenet to 58 per cent.
Buying Virgin Media could give Liberty Global, which is based in Colorado, savings across its network in countries such as the Netherlands, Germany, Switzerland and Chile if it could pool the purchase of set-top boxes and other technology.
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However, analysts typically see few synergies in cable companies' acquisitions of networks that are not immediately adjacent to their own.
More than a decade ago, before the 2006 merger of NTL and Telewest that created Virgin Media, Mr. Malone made two unsuccessful attempts to control NTL and bought about a quarter of Telewest's equity.
The UK is one of Europe's most competitive pay-television markets, with Virgin Media's cable network facing aggressive price competition from BSkyB and BT Vision. Virgin Media's growth has been helped by business revenues and its mobile offering.
Sir Richard's Virgin Group has reduced its stake in recent years to just under 3 percent of the equity but receives a percentage of its revenues as a royalty payment each year, worth about 10 million last year. Virgin Group would not have a veto over any deal.