International cable company Liberty Global has agreed to buy Cable & Wireless Communications (CWC), a telecommunications company with operations in the Caribbean and Central America.
The company says the strategic combination “will create the leading consumer and business-to-business communications provider in Latin America and the Caribbean”.
Liberty Global has offered shares worth approximately £3.5 billion ($5.3 billion), giving an implied price of 78.04 pence per CWC share, based on closing share prices before the deal was disclosed. CWC shareholders would also be entitled to receive a special dividend in the amount of 3 pence per share, which would be in lieu of any previously announced CWC dividend.
The acquisition marks the end of one of the oldest British telecommunications companies. Cable and Wireless can trace its history back to the 1860s when it laid down transatlantic submarine telegraph systems connecting the UK with the British colonies in India and the Caribbean.
Having been nationalised in 1947 and then returned to private ownership in 1981, as the government of the day dictated, Cable & Wireless was granted a licence to operate a UK telecommunications network as the first rival to British Telecom (now BT). This was set up through a subsidiary, Mercury Communications, whose cable assets were sold in 2000 and eventually wound up as part of the modern day Virgin Media – bought by Liberty Global Group in 2013.
Meanwhile, Cable & Wireless was split into two business divisions: Cable & Wireless Worldwide, which was bought by Vodafone in 2012, and Cable & Wireless International, which focused on the enterprise market. After the company decided to demerge in 2010, the International division became CWC and decided to focus its efforts in the Caribbean and Latin America.
That focus is a key motivation behind the transaction. Liberty plans to combine CWC’s business with its existing Latin American and Caribbean Group (LiLAC) operations in Puero Rico and Chile.
Mike Fries, CEO of Liberty Global, said: “The acquisition of Cable & Wireless represents a watershed moment for our recently created LiLAC platform. It will add significant scale and management depth to our fast-growing operations in Latin America and the Caribbean, while creating a new regional consumer and B2B powerhouse. Upon completion, the combined business will serve 10 million video, data, voice and mobile subscribers, with leading positions across multiple markets.”
Assuming the deal goes ahead, then Liberty will face the task of integrating a company that is itself going through an integration process – having acquired Barbados-based telecoms operator Columbus International in March earlier this year.
The deal is expected to close in the second quarter of 2016, subject to shareholder approvals on both sides as well as regulatory approvals and court sanction of the ‘scheme of arrangement’.