VIRGIN Media’s new owners yesterday pledged business would continue as usual, despite the telecoms firm’s chief executive announcing he would step down.
After signing a $23.3bn (£14.9bn) agreement to buy the company, bosses at Liberty Global played down suggestions of massive investments in TV rights that would heighten Virgin Media’s competition with Rupert Murdoch’s BSkyB.
Liberty, which said it would become “the world’s leading broadband communications company” on completing the deal, announced the acquisition yesterday morning.
Virgin Media’s chief executive Neil Berkett, who has led the company since 2007, shortly after its formation, announced he would step down once the deal is finalised. Berkett, who has built up a sizeable bundle of Virgin Media shares and options, will pocket $65m, rising to as much as $85m, when he leaves.
“I’m not a very good number two,” Berkett said yesterday. Liberty’s chief executive Mike Fries said he had not started the process of appointing a successor. Fries said Virgin Media would keep its branding, and that he was not planning a major change of strategy. Virgin Media currently pays Sky to offer some of its channels on Virgin Media’s own service, rather than competing for sports and movie rights, and Fries said this relationship with Sky would continue.
“I think Neil’s done a terrific job building a strong relationship with Sky. We don’t see any reason why that would change or why Virgin Media needs to compete with Sky for that premium content so I don’t see any significant changes in strategy,” Fries said.
His comments were echoed by John Malone, the billionaire chairman behind Liberty Global. Malone’s entry into the UK telecoms market created a new rivalry with Murdoch, whose News Corp owns 39 per cent of BSkyB, after the two had vied for control of US media companies in the early 2000s. But Malone pointed to “a long history of co-operative relationships with News Corp” yesterday. The deal came as Virgin Media posted a slight annual rise in customers to 4.9m, and said it had moved more people on to “triple-play” contracts, in which they take landline, broadband and pay-TV services.
ADVISERS LIBERTY’S HIGHLY LEVERAGED TAKEOVER
PETER GROSS AND MIKE SMITH
VIRGIN Media’s $23.3bn (£14.8bn) sale to Liberty Global saw a host of banks and lawyers poring over the books, with the deal funded by an enormous mix of bonds and loans. The deal will see Virgin Media take £2.3bn of debt – the biggest junk sale in Europe since 2010 – with Liberty’s loans on the deal equivalent to £2.9bn. This required some heavy work from the two companies’ advisers. Virgin Media was advised by its house broker Goldman Sachs, with managing directors Peter Gross and Mike Smith working on the deal in New York where the agreement was signed late on Tuesday night. Also working on the deal on Virgin Media’s behalf was JP Morgan in the UK, with the bank’s London co-head of technology, media and telecoms investment banking David Lomer leading the team. Lomer, who has been at JP Morgan and its predecessors since 1997, has worked on a variety of deals around Europe, including the initial public offering of Dutch cable firm Ziggo in March last year. Lomer has spent most of his JP Morgan career in media M&A, and was made co-head of the division last year. Leading the JP Morgan team in New York was Ben Berinstein, the bank’s US co-head of corporate finance advisory. Liberty Global’s lead financial advisers were New York boutique investment bank Liontree advisors, while Credit Suisse’s Marisa Drew, co-Head of the bank’s global markets solutions group, led the team in London.
New York’s Milbank and Fried Frank were legal advisers to Virgin Media, while Shearman & Sterling and Ropes & Gray worked for Liberty Global.