Liberty Global considering bidding for Virgin Media

BY A CORRESPONDENT

1 August, 2007:

John Malone, media magnate and chairman of Liberty Global, is considering entering a $23-billion auction for Virgin Media, the largest cable operator in the United Kingdom.

Malone, who is also chairman of Liberty Media, called his interest in Virgin Media exploratory but said his company was “doing our homework,” the Financial Times reported on its website.

Virgin Media had asked suitors to submit expressions of interest by the first week of August 2007 prior to an auction of the company.

About 10 suitors have expressed an interest since private equity firm Carlyle Group made an initial offer earlier in July 2007.

An auction of the struggling cable company was kicked off following an indicative proposal of US $32-33 per share from Carlyle Group.

However, the prospect of a private equity-style leveraged takeover has receded in recent weeks thanks to the recent turmoil on global credit markets.

Financing a $23-billion equity and debt package in tight credit markets may make Liberty Global an attractive partner for a private equity bidder, according to the Financial Times.

Liberty Global, the holding company for John Malone’s non-US cable assets, spans much of Europe as well as cable systems in Japan and Latin America, but has been frustrated in the United Kingdom and Germany, the Financial Times said.

Virgin Media was formed through mergers and acquisitions in the United Kingdom’s cable and wireless-phone industries in 2005 and 2006. Richard Branson is Virgin Media’s largest investor, with a 10.5% holding.

The company has about 13.5 million customers, including mobile-phone subscribers.

Liberty Global, based in Englewood, Colorado, the United States, was split off in 2005 by Liberty Media Holding Corporation. Both companies are controlled by John Malone.

Liberty Global invests primarily in cable companies in countries like Romania and Hungary, where pay-television businesses have a high growth potential because the majority of the population there does not pay for television, according to the Wall Street Journal.