Liberty global virgin media merger analysis
Sponsored Links
This presentation is the property of its rightful owner.
1 / 22

Liberty Global – Virgin Media Merger Analysis PowerPoint PPT Presentation


  • 86 Views
  • Uploaded on
  • Presentation posted in: General

Liberty Global – Virgin Media Merger Analysis. Krunal Intwala Samantha Hess Joe Cardoso Anisha Gandhi Michael Schneider. May 9 th , 2013. Liberty Global & Virgin Media | May 9 th , 2013 1. Executive Summary. Recommendation Buy Virgin Media

Download Presentation

Liberty Global – Virgin Media Merger Analysis

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Liberty Global – Virgin Media Merger Analysis

KrunalIntwala

Samantha Hess

Joe Cardoso

Anisha Gandhi

Michael Schneider

May 9th, 2013

Liberty Global & Virgin Media | May 9th , 20131


Executive Summary

  • Recommendation Buy Virgin Media

    • The Merger will create world’s leading broadband communications company

    • Liberty Global will gain access to UK market

    • It will add 5 million customers to Liberty Global’s existing 20 million customers

    • Combined synergy

      • $110 million in cost savings

      • $60 million in CapExsavings

  • Terms of Acquisition

    • The deal is $23.3 billion with offering premium of 24% at $47.87 Virgin Media share

    • 36% of Liberty Global’s shares will be owned by Virgin Media Shareholders with approximately 26% of voting rights

  • Company Description

    • Liberty Global: Leading international cable operator in Europe and South America serving 13 countries

    • Virgin Media: Leading provider of entertainment and communication services in the United Kingdom

  • Industry Outlook

    • Industry is expected to grow until 2016 at an average annual rate of 4.55% (exception for telephony industry)

Liberty Global & Virgin Media | May 9th , 20132


Decision

Recommendation: Buy Virgin Media

  • World’s leading broadband communication company

  • Liberty global will gain access to UK market

  • Complementary strengths across video, voice and broadband products

  • Combined synergy

    • $110 million in cost savings

    • 60 million in CapExsavings

  • Combined company will have more leverage over negotiating contents licenses

  • Liberty Global will benefit from tax breaks from past Virgin Media’s capital losses

    • In December 2012, Virgin used the differed tax benefit approximately $4 billion

  • Liberty will be relocated to the United Kingdom by becoming a subsidiary of a new holding company, a UK plc.

Liberty Global & Virgin Media | May 9th , 20133


Terms of Acquisitions

  • Deal Size = $23.3 billion dollars

  • Deal Price = $47.87 per Virgin Media share

    • 24% Premium

  • Cash & Stocks Offer

    • $17.50 in Cash

    • 25.82% of LG Series A Shares

    • 19.28% of LG Series C Shares

    • LG will issue approximately $86 million LG Class A shares and 65 million LG Class C shares.

    • 36% of Liberty Global’s shares will be owned by Virgin Media Shareholders with approximately 26% of voting rights


Virgin Media DCF Analysis


Virgin Media Implied Enterprise Value


Virgin Media Implied Share Prices


Liberty Global Key Facts

John Malone, Chairman

Revenue: $10.3 billion (in millions)

Customers: 19.8 million

Michael Fries, President & CEO

Headquarters: Englewood, Colorado

Employees: 22,000+

Revenue: $10.3 billion dollars

Customers: 19.8 million

34.2 million homes passed

34.8 million RGUs


What is Liberty Global?

  • Liberty Global is a leading international cable operator with operations across 13 countries.

  • Their products/services include… (not a complete list)

    • Cable: Basic and premium programming, HD, DVR, HD-DVR, VoD, an electronic programming guide, etc. (45% of revenue)

      • Chellomedia: Producer and distributor of TV channels.

      • Content: 67 channels, of which 48 are 100% owned.

      • Revenue: 514 million dollars in 2012, 3% of total revenue.

      • Distribution: 390 million TV households.

    • Internet: High speed Internet access ranging from 100 Mbps to 150 Mbps.

      • 24% of revenue

  • Telephony: Various different telephone services, dependent on customer. (International calling, minute packages, telephone rental, etc.)

    • 15% of revenue

  • Business Services: Designed with the customer in mind to meet their specific needs.


  • The Americas

    • Puerto Rico

      • Largest cable operator

      • 479,000 service subscribers

    • Chile

      • Largest multi-channel television provider


    Europe

    • Austria, Belgium, Czech Republic, Hungary, Ireland, Poland, Slovakia and Switzerland. (9)

      • The largest cable operators in their respective markets.

    • Germany, Netherlands and Romania. (3)

      • 2nd largest cable operators in their respective markets.

      • Germany alone accounts for 22% of Liberty’s total revenue.


    What is Liberty Global’s Strategy?

    • Telnet

    • Astral

    • NTL Ireland

    • Inode

    • Liberty’s business strategy has two main components…

      • Organic Growth

        • Innovation

          • Horizon TV

          • Mobile Services

        • Bundling Products & Services

          • Single-Play  54%

          • Double-Play  30%

          • Triple-Play  16%

    • Mergers & Acquisitions

      • For the past seven years, LG has focused on pursuing beneficial acquisitions.

        • Odakyu Telecommunication Services

        • Cablecom

        • IPS Multicanal

        • Austar


    SWOT Analysis


    Virgin Media Key Facts

    Revenue: $6.5 billion (in millions)

    Neil Berkett, CEO

    16.3

    83.7

    Headquarters: New York City, New York

    Employees: 12,000+

    Revenue: $6.5 billion dollars

    Customers: 5 million

    13 million homes passed

    12 million RGUs


    What About Virgin Media?

    • Virgin Media is a leading provider of entertainment and communication services in the United Kingdom.

    • Virgin operates in two segments...

      • Consumer: This segment includes our cable, internet and telephony services to our residential customers.

        • Accounts for 83.7% of revenue.

    • Business: This segment includes our cable, internet and telephony services to our business customers based upon their required needs.

      • Accounts for 16.3% of revenue.


    SWOT Analysis


    Deal Highlights

    • 80% of the combined company’s revenue will be coming from just 5 of it’s markets.

      • United Kingdom

      • Germany

      • Belgium

      • Czech Republic

      • The Netherlands


    Industry Outlook

    Forecasted Annual Growth Until the Year 2016


    VM & LG vs. the Industry

    Virgin Media & Liberty Global Compared to the Industry


    VM & LG Together

    Combined Results


    Common Size Balance Sheet


    Works Cited

    Liberty Global 10K

    Virgin Media 10K

    Bloomberg Terminal

    www.WallStreetJournal.com

    www.OneSource.com

    www.IBISWorld.com

    www.MarketLine.com


  • Login