Liberty Global to buy Cable & Wireless for $US5.3bn

John Malone's Liberty Global has agreed to buy Cable & Wireless Communications in a cash-and-stock transaction valued at £3.5 billion ($US5.3 billion), extending the U.S. billionaire's European cable empire deeper into Latin America with an eye for more deals in the region.

The deal represents a multiple of 10.7 times Cable & Wireless Communications' adjusted annual earnings before interest, depreciation, taxes and amortisation, after taking into consideration cost synergies, according to a statement. Cable & Wireless shareholders will get a special 3 pence a share dividend at the deal's close. The transaction is valued at 78.04 pence per CWC share, based on Friday's closing price.

The purchase would give Malone a critical mass in Latin America, where he created a tracking stock in July called LiLAC for Liberty Global's assets in Chile and Puerto Rico. Malone spent more than $US50 billion the past decade amassing cable companies across Europe. Now, with Cable & Wireless, he is poised to do the same in faster-growing economies in Latin America, and may even spin off that unit in the future, people familiar with the matter said last month, when the companies announced they were in talks.

Cable & Wireless, which also owns a network in the Seychelles, received more than half of its $US1.75 billion in revenue last year from Panama and the Caribbean. Malone became a shareholder last year when Cable & Wireless bought his cable TV and Internet provider Columbus International. As part of that deal, Malone and the two co-founders of Columbus were given a 36 per cent stake of the combined company.

Malone is using Liberty's LiLAC Group tracking stock in the deal. Liberty's businesses are attributed to two tracking stock groups: the Liberty Global Group, which comprises the company's European operations; and the LiLAC Group, which comprises Latin American and Caribbean operations.