US$8.2 billion Liberty Global deal for CWC – How Digicel Play competition means benefits for Jamaica and the Caribbean

“By joining forces at this time, we combine our high growth assets in Latin America and the Caribbean, with the scale and complementary skills of a truly world class global player, materially improving our ability to offer leading products and services to customers in the region we serve. And by adding their strength and 1.5 million customers in Puerto Rico and Chile, backed by our strengths in adjoining markets and in leading submarine and terrestrial fibre networks, together we expect to grow our consumer and B2B offers even faster”

CWC in a statement to shareholders after the purchase of CWC by Liberty Global for US$8.2 billion

People of Jamaica, we have a deal!

Liberty Global has agreed to acquire CWC (Cable and Wireless Communication) for US$8.2 billion Deal on Monday November 16^th 2015 as reported in the article “Liberty Global To Acquire CWC In US$8.2b Deal”, published Monday November 16, 2015, The Jamaica Gleaner.

The deal, which consists of cash and equities purchase, translate to 86.82 pence (US$1.32) per share is an 18% premium on CWC’s stock price up to Friday November 13^th 2015. At US$8.2 billion dollars, it covers the debt as well as values CWC at 12.3 times its EBITDA, which is Revenue minus Expenses excluding tax, interest, depreciation and amortization.

Liberty Global, the world’s largest cable television company has founder and Chairman John Malone at its helm. Malone had long expressed a desire since October 2015 to wrap up the purchase of CWC by November 2015 as reported in my blog article entitled “US$5.5 billion Liberty Global purchase of CWC's FLOW Jamaica - Why Digicel Play will truly Liberate Cable Subscribers”. 

John Risley and Brendan Paddick have already cashed in their combine 36% stake in CWC to liberty, making Liberty Global chairman John Malone possess a 49% stake in CWC, more than enough to take control of the CWC board. Already CWC has put out a statement announcing its recommendation of the takeover offer to shareholders.

Liberty Global acquires CWC – How Digicel Play competition means benefits for Jamaica and the Caribbean

With the deal expected to close in the Second Quarter of 2016 after the London Stock Exchange and NYSE Stock exchange as well as SEC (Securities and Exchanges Commission) grants their blessing, expect to see some interesting changes at FLOW, the subsidiary that Liberty Global is really after. Liberty Global will merge the CWC operations with LiLac, as predicted.

Apparently 27 million subscribers and US$18 billion of annual revenue from the Eurozone, USA and the Netherlands; they had to go after CWC's 6.3 million customers and a presence in 42 markets. Despite the purchase of their debt, they've more or less netted a solvent company that's racking up US$2.4 billion in revenue via its multiple operations:

1.      LIME and Flow operations in the Caribbean

2.      BTC in the Bahamas

3.      Mas Movil in Panama

4.      C&W Business and C&W Networks elsewhere

Where does Liberty Global go from here?

Most likely continue with the launch of the 4G LTE (Long Term Evolution) Network and a possible rollout of a FTTH (Fiber to the house) network to replace the Coaxial Cable Network that they inherited from FLOW as noted in my blog article entitled “CWC invests US$250 million in LIME Jamaica - Mobile 4G LTE, Broadband, LIME TV and FTTH Expansion will make LIME the Google of Jamaica” as they chase the expansion of Digicel Play!