Liberty Global Acquires Cable & Wireless Communications

Liberty Global Plc. (NASDAQ:LBTYA) - a leading cable MSO (multi service operator) in Europe and Latin America - recently took over a major Caribbean cable operator – Cable & Wireless Communications Plc. The deal was valued at approximately $7.4 billion on an enterprise value basis. Cable & Wireless will be integrated into Liberty Global’s Latin American and Caribbean group (the “LiLAC Group”).

The deal was formulated in Nov 2015 and the two companies received their shareholders’ approval on Apr 2016. The combined entity will become a formidable player in Latin and Central America as a consumer and business-to-business communications service provider.

Currently, Cable & Wireless and LiLAC jointly serve 10,049,200 customers including 1,767,400 video, 2,037,600 broadband, 2,003,200 telephony and 4,241,000 mobile subscribers. The combined entity has a footprint in 20 Latin or Central American markets and is expected to generate over $3.6 billion in revenues per annum with an asset base of $10.211 billion.

The acquisition of Cable & Wireless will enable Liberty Global to boost its rapidly growing operations in Latin America and the Caribbean region. Also, Liberty Global aims to gain from Cable & Wireless’ extensive network of undersea cables in the region, given the rapid increase in broadband data consumption. Further, the combined operations will help Liberty Global achieve economies of scale.

Moreover, it is estimated to deliver low double-digit rebased operating cash flow (OCF) growth over the medium term. Also, together with significant synergy prospects, the combined operations will open up additional consolidation opportunities throughout Latin America and the Caribbean.

Zacks Rank & Stocks to Consider

Liberty Global currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same industry include Rogers Communications Inc. (NYSE:RCI) , Cablevision Systems Corp. (NYSE:CVC) and TiVo Inc. (NASDAQ:TIVO) . All three stocks currently sport a Zacks Rank #1 (Strong Buy).