Despite all the concern about the credit crunch, a big private equity deal seems to be moving forward. On Monday, John Malone, Chairman of Liberty Media tells the Financial Times he's considering enterting the auction for Richard Branson's Virgin Media . This could be a huge deal--the largest cable transaction outside the U.S.
To give a sense of scale: The Carlyle Grouphas made a bid for Virgin Media worth some $23 billion dollars, and some other private equity players have also bid. One upshot of the credit crunch--private equity may not want to go forward with their bids, and Liberty may have a better shot.
That's not to say that Liberty will go it alone--Malone could partner with Carlyle or one of the other PE players. Or, Malone could keep Branson in the game, and Branson would likely keep some sort of equity holding in the company.
So why does Malone want this Virgin territory? For one, Malone knows cable better than almost anyone else and this would give him a huge presence in Europe, plus the ability to find some synergies with Liberty's existing properties. Then there's the fact that Virgin has about $24 billion dollars of accumulated losses--which is a good thing. It means that when Virgin turns profitable, those losses could potentially be used to offset taxes of future profit.
