LGI faces resistance over pricing of offer for Telenet shares

10 Jan 2013

Efforts by US cable holding group Liberty Global Inc (LGI) to acquire the shares in Belgian cableco Telenet that it does not already own have run into further trouble. The Wall Street Journal is reporting that another of Telenet’s larger shareholders has said it will not accept the EUR35 (USD46) per share tender offer proposed last month by LGI. Omega Advisors Inc, which holds more than 3% of Telenet, has said it will not sell its shares at that price, with its stance echoing that of Norges Bank Investment Management, which last month confirmed it would not divest its 4% holding based on the existing tender offer.

It has been suggested that a key element of the dispute regarding the value of the shares relates to Telenet’s wireless operations. With the cableco having revealed at the end of last year that it had signed up 500,000 mobile voice subscribers, hitting that figure far faster than had been expected, investors and Telenet officials have argued that the company is worth more than the LGI offer. Jon Aborn, co-director of research at Omega Advisors, was cited as saying: ‘We have communicated to the board that we will not tender any shares at EUR35 … We think that, at EUR35, the shares are attractively priced before any consideration for the mobile business, tax attributes, or potential synergies.’ For its part, LGI has countered that Telenet’s expectations for mobile growth over the long term are unrealistic.

As previously reported by CommsUpdate, LGI in September 2012 announced its intention to launch a voluntary and conditional cash offer to buy the outstanding shares in Telenet that it did not own for EUR1.96 billion (USD2.55 billion). Through its wholly owned subsidiary, Binan Investments, LGI already holds a 50.4% stake in the operator and has been the controlling shareholder since February 2007. ‘We believe this is the right time for Telenet to become a wholly-owned part of Liberty Global’s pan-European platform in its next stage of development, particularly in light of the competitive and regulatory outlook in Belgium,’ commented Mike Fries, president and CEO of LGI, at the time of the announcement.

Belgium, Liberty Global (incl. LGI), Telenet (incl. BASE)