Liberty Global said it expects the takeover to result in operating and capex synergies of around USD 180 million in the first full year of integration. Virgin Media is also expected to help the company's strategy in mobile and business services, where it has been looking to grow. Liberty Global expects increased cash flow from the deal and pledged to raise its share buyback to USD 3.5 billion over two years once the takeover is completed.
Liberty plans to finance the cash portion of the takeover, worth about USD 5.9 billion, with its own cash and that of Virgin Media, as well as an increase in Virgin's debt by around USD 3.0 billion. The company would be leveraged at about five times operating cash flow, and Liberty targets reducing this to 'mid 4s' by the end of 2014. The shares component will give Virgin shareholders 36 percent of Liberty Global's capital and 26 percent of the voting rights, including a seat on the board.
Liberty Global also plans to move its holding company from the US to the UK after the takeover, and said it could later pursue a stock listing in Europe. The deal still requires shareholder approval, planned for the second quarter, and Liberty's largest shareholder, John Malone with 35 percent, has pledged to support the deal. Virgin Media will continue under the same name after the takeover.
