Malone merger creates world broadband giant

MEDIA mogul John Malone is consolidating his media empire by merging Liberty Media group with its affiliate UnitedGlobalCom (UGC) into one business called Liberty Global.

The move will make the combined group one of the world's largest broadband operators, serving more than 14m people in 17 countries.

Under the deal, Liberty Media International and UGC will become wholly-owned subsidiaries of Liberty Global.

Liberty Media shares will be swapped one-for-one for Liberty Global stock, while a cash alternative of $9.58 (£5.21) per UGC share will be available to shareholders.

The new firm will have a 10-member board of directors with five from each of Liberty's and UGC's existing boards under Malone as chairman. UGC's Michael Fries will be president and chief executive.

'As demonstrated by the new name of our company, I view this transaction as a merger of equals, creating one of the largest broadband services companies outside the United States,' Malone said.

'In a very short period of time, we have disposed of non-strategic businesses and put in place a simplified structure from which our operating businesses can focus on their respective markets, including-Europe, Japan and Chile. 'From this structure, I am confident that Mike Fries and the rest of the management team can create value for our shareholders through internal growth and prudent acquisitions.'

Fries said Liberty Global would have one of the strongest balance sheets in the industry as well as cash to pursue acquisitions.

'The deal also provides UGC shareholders with an interest in the fast-growing Japanese market at an attractive valuation,' he said. 'We are very excited about the global scale this transaction creates and the benefits that will accrue to both parties.'

The merger is subject to shareholder approval from both companies and the deal is expected to be completed in the second quarter.

Apart from its broadband interests, Liberty Media International, through its subsidiary companies, is the largest cable television operator outside the US in terms of video subscribers through its affiliates.

UGC operates in 15 countries, with 9.1m video subscribers, 761,000 telephone customers and 1.3m internet users.

Last December, it bought Liberty Media International's stake in Belgian cable operator Telenet for about $143m (£77m). The company also paid Liberty Media stock valued at $55m for Irish pay-TV company Chorus Communications.