Liberty Global to Acquire Virgin Media

  Liberty Global to Acquire Virgin Media

Powerful combination creates the world’s leading broadband communications
company

  *25 million customers in 14 countries
  *Complementary strengths across video, voice & data products
  *Significant potential to monetize customer base
  *Substantial synergy opportunity
  *Accretive to free cash flow
  *Strengthened commitment to shareholder returns

Business Wire

ENGLEWOOD, Colo. -- February 5, 2013

Liberty Global, Inc. (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK) and
Virgin Media Inc. (“Virgin Media”) (NASDAQ: VMED; LSE: VMED) today announced
that they have entered into an agreement, subject to shareholder approvals,
pursuant to which Liberty Global will acquire Virgin Media in a stock and cash
merger valued at approximately $23.3 billion.

Under the terms of the agreement, Virgin Media shareholders will receive
$17.50 in cash, 0.2582 Liberty Global Series A shares and 0.1928 Liberty
Global Series C shares for each Virgin Media share that they hold. Based on
Liberty Global’s Series A share price of $69.46 and Series C share price of
$64.50 as of February 4, 2013, this implies a price of $47.87 per Virgin Media
share, reflecting a 24% premium to Virgin Media’s closing price on February 4,
2013.^1

A Powerful Combination

Creation of the world’s leading broadband communications company, covering 47
million homes and serving 25 million customers across 14 countries. The
combined company will be focused on the strongest and most strategic markets
in Europe, with the scale to be at the forefront of technological change for
customers.

Complementary strengths across product suite, with aligned triple-play
products, roadmap and expertise across digital TV, broadband and telephony
services. Mobility and B2B expertise offer significant additional growth
potential in key markets.

Significant potential to monetize customer base, with opportunity to deliver
current customers enhanced bundled and premium services.

Substantial synergy opportunity, driven by scale advantages across core
functional areas.

Accretive to free cash flow, with combined track record of exceptional free
cash flow generation.

Increased commitment to shareholder returns, leveraging the financial strength
of the combined company, which generated $16.8 billion of revenue and $7.5
billion of Operating Cash Flow (“OCF”)^2 in 2012.

Mike Fries, President and CEO of Liberty Global, said: “Adding Virgin Media to
our large and growing European operations is a natural extension of the value
creation strategy we've been successfully using for over seven years. Virgin
Media will add significant scale and a first-class management team in Europe's
largest and most dynamic media and communications market. After the deal,
roughly 80% of Liberty Global's revenue will come from just five attractive
and strong countries - the UK, Germany, Belgium, Switzerland and the
Netherlands."

"Like all of our strategic acquisitions we expect this combination to yield
meaningful operating and capex synergies of approximately $180 million per
year upon full integration. But just as importantly, Virgin Media's market
leading innovation and product expertise, particularly in mobile and B2B, will
accelerate our own development of these business segments."

"For these and other reasons, Virgin Media will be complementary to our own
organic revenue and OCF growth profile, while providing attractive free cash
flow enhancement to our shareholders. As a result, we intend to increase our
commitment to share buybacks going forward with an initial target of
approximately $3.5 billion over a two-year period upon closing."

Virgin Media CEO Neil Berkett said: “Over the past six years, Virgin Media has
transformed the digital experience of millions of customers, catalyzed a
deep-rooted change in the UK’s digital landscape and delivered impressive
growth and returns for our shareholders. I’m confident that this deal will
help us to build on this legacy. Virgin Media and Liberty Global have a shared
ambition, focus on operational excellence and commitment to driving
shareholder value. The combined company will be able to grow faster and
deliver enhanced returns by capitalizing on the exciting opportunities that
the digital revolution presents, both in the UK and across Europe.”

Transaction Details

The implied purchase price, before taking into account transaction costs and
other expenses, represents an equity value of approximately $16.0 billion and
an enterprise value of approximately $23.3 billion. This represents a purchase
price multiple of 8.8 times Virgin Media’s 2012 OCF, and 7.0 times Virgin
Media’s 2013 estimated OCF, after taking into consideration the expected
annual impact of approximately $110 million of operating synergies that may be
realized following full integration and after adjusting the consideration to
be paid for certain tax assets.^3

The equity purchase price will consist of a combination of shares and cash.
Based on Virgin Media’s fully-diluted shares of 335 million,^4 Liberty Global
would issue approximately 86 million Liberty Global Class A shares and 65
million Liberty Global Class C shares (in each case such shares will be shares
of the plc with substantially similar rights as the existing Series A and
Series C common stock of Liberty Global, as applicable). In addition, each
issued and outstanding share of Liberty Global common stock will be exchanged
for one share of a class of ordinary shares of a newly-formed UK public
limited company (plc) carrying substantially similar rights as the existing
series of Liberty Global common stock exchanged. Based on issued and
outstanding shares of Liberty Global as of February 1, 2013 and adjusting for
the transaction, it is expected that Virgin Media shareholders will own
approximately 36% of the pro forma shares outstanding of Liberty Global and
have approximately 26% of the voting rights.

The cash component of the equity purchase price, totaling approximately $5.9
billion,^5 will be funded largely through a combination of debt financing and
available liquidity of both Liberty Global and Virgin Media. We intend to
increase Virgin Media’s debt by more than $3.0 billion, such that on a pro
forma basis, Virgin Media’s debt will fall well within our normal leverage
target of four to five times annualized OCF.^6 Together with the net proceeds
of Virgin Media’s debt financing, the transaction will be funded with cash and
other sources of liquidity of Virgin Media and cash and borrowing availability
under Liberty Global’s existing credit facilities. Adjusting for the
transaction and completion of the intended financings, we estimate the
leverage on the combined company would have been approximately 5 times at
December 31, 2012, which would serve as a modest deleveraging event for
current Liberty Global shareholders. We are targeting mid-4’s leverage by
year-end 2014.

As part of its acquisition of Virgin Media, Liberty Global will redomicile
from Delaware to the United Kingdom by becoming a subsidiary of a new holding
company, a UK plc. Liberty Global’s current headquarters and other principal
offices will remain in place. Liberty Global will be listed on NASDAQ and will
continue to report earnings and other financial statements in accordance with
Securities and Exchange Commission regulations, including dollar denominated
financial statements. Liberty Global’s Board of Directors will continue to
form the board of Liberty Global, with the addition of one Virgin Media
director to be named prior to the closing. Liberty Global believes that the
creation of a UK plc as a new holding company will have several business and
financial benefits, including increased strategic and financial flexibility,
as it pertains to value creation for its shareholders. After closing of the
transaction, Liberty Global may look to implement a European listing. Virgin
Media will continue to operate under the Virgin Media brand in the UK.

Based upon facts and circumstances as of the date of announcement, Liberty
Global believes that the share exchange as structured may not be taxable to
U.S. shareholders of Liberty Global. However, the ultimate tax treatment of
the share exchange is not certain and is dependent upon the facts and
circumstances at the closing date, which are difficult to predict and are
outside of Liberty Global’s control. The transaction is not conditioned upon a
determination as to the tax treatment for Liberty Global stockholders. Further
details will be provided in the proxy statement which will be designed to
enable Liberty Global shareholders to evaluate the tax treatment with their
own tax advisors.

The transaction is subject to majority approval from both companies’
shareholders, regulatory approvals and other customary closing conditions. The
respective shareholder meetings, as well as the closing of the transaction,
are expected to occur in the second quarter of 2013. Through certain trust
arrangements, Mr. John Malone controls in excess of 35% of the voting power of
Liberty Global, and he has committed to support the transaction in his
capacity as a shareholder.

In connection with the transaction, LionTree Advisors acted as lead financial
advisor to Liberty Global. Credit Suisse also acted as financial advisor and
sole global coordinator and consent solicitation agent for the debt financing.
Shearman & Sterling and Ropes & Gray served as legal counsel to Liberty
Global. On behalf of Virgin Media, Goldman Sachs & Co. and J.P. Morgan acted
as financial advisors and Fried Frank and Milbank served as legal counsel.
Goldman Sachs International acted as corporate broker to Virgin Media.

Conference Call to Discuss Transaction

We will conduct a joint call to discuss the transaction on February 6, 2013 at
8:30 am EST (1.30 pm GMT). At that time, management of both Liberty Global and
Virgin Media may make observations concerning their historical operating
performance, their results for the fourth quarter and full-year 2012 and may
make comments regarding outlook and other forward-looking information. Please
call at least 15 minutes prior to the start of the teleconference.

888.299.7212           United States (toll-free)
719.457.2088             United States
+44 (0) 800.404.7656     United Kingdom
3431887                  Participant Passcode

In addition to the teleconference, a live, listen-only webcast will become
available within the Investor Relations section of both Liberty Global and
Virgin Media’s website. It is anticipated that the webcast will be archived in
the Investor Relations section of both websites for at least 30 days.

Notice

Neither company is registering under the Securities Act of 1933 the offering
of any securities that may be issued to finance the transaction, and any
securities so issued may not be offered or sold in the United States absent an
applicable exemption from the U.S. registration requirements.

LionTree Advisors and Credit Suisse are not acting for anyone other than
Liberty Global, and Goldman Sachs and J.P. Morgan are not acting for anyone
other than Virgin Media and in each case will not be responsible to anyone
other than Liberty Global and Virgin Media, as applicable, for providing the
protections afforded to their clients nor for providing advice in relation to
the transaction.

   
     In the transaction, Liberty Global will create a new holding company, a
^1   UK public limited company (plc), listed on NASDAQ. The shares delivered
     therefore will be shares of the plc entity with substantially similar
     rights, as the current Liberty Global shares of common stock.
^2   References in this release to OCF refer to OCF as customarily defined by
     Liberty Global.
^3   Assumptions underlying forward purchase multiple as estimated by Liberty
     Global.
^4   Includes approximately 54 million shares issuable on conversion of
     convertible debt.
^5   Before estimated transaction costs, expenses and the pre-closing carrying
     cost of the debt of approximately $500 million.
^6   Annualized OCF is calculated by multiplying OCF for the latest quarter by
     four.
     

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including statements
regarding the transaction and the anticipated consequences and benefits of the
transaction, the targeted close date for the transaction, our estimate of
Virgin Media’s 2013 OCF, the intended financing, our estimate of synergies and
the value of certain tax assets, our expectation regarding combined leverage
and liquidity, our expectations with respect to free cash flow and shareholder
returns, our expectations with respect to future growth prospects and the
impact of the transaction on our operations and financial performance, and
other information and statements that are not historical fact. These
forward-looking statements involve certain risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by
these statements. These risks and uncertainties include the receipt and timing
of necessary regulatory approval, the ability to finance the transaction
(including the completion of the debt financing), Virgin Media’s ability to
continue financial and operational growth at historic levels, the ability to
successfully operate and integrate the Virgin Media operation and realize
estimated synergies, continued use by subscribers and potential subscribers of
Virgin Media’s services, the ability to achieve expected operational
efficiencies and economies of scale, as well as other factors detailed from
time to time in Liberty Global’s and Virgin Media’s filings with the
Securities and Exchange Commission (“SEC”) including our most recently filed
Forms 10-K and 10-Q. These forward-looking statements speak only as of the
date of this release. We expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement
contained herein to reflect any change in the our expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.

Additional Information and Where to Find it

Nothing in this press release shall constitute a solicitation to buy or
subscribe for or an offer to sell any securties of Liberty Global, Virgin
Media or the new Liberty Global holding company. In connection with the
proposed transaction, Liberty Global and Virgin Media will file a joint proxy
statement/prospectus with the SEC, and the new Liberty Global holding company
will file a Registration Statement on Form S-4 with the SEC. STOCKHOLDERS OF
EACH COMPANY AND OTHER INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT
AND JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain a
free copy of the registration statement and joint proxy statement/prospectus,
as well as other filings containing information about Liberty Global, Virgin
Media and the new Liberty Global holding company, without charge, at the SEC's
Internet site (http://www.sec.gov). Copies of the registration statement and
joint proxy statement/prospectus and the filings with the SEC that will be
incorporated by reference therein can also be obtained, without charge, by
directing a request to Liberty Global, Inc., 12300 Liberty Boulevard,
Englewood, Colorado, 80112, USA, Attention: Investor Relations, Telephone: +1
303 220 6600, or to Virgin Media Limited, Communications House, Bartley Wood
Business Park, Bartley Way, Hook, RG27 9UP, United Kingdom, Attn: Investor
Relations Department, Telephone +44 (0) 1256 753037.

Participants in Solicitation

The respective directors and executive officers of Liberty Global and Virgin
Media and other persons may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. Information regarding
Liberty Global's directors and executive officers is available in its proxy
statement filed with the SEC by Liberty Global on April 27, 2012, and
information regarding Virgin Media's directors and executive officers is
available in its proxy statement filed with the SEC by Virgin Media on April
30, 2012. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with the SEC
when they become available. These documents can be obtained free of charge
from the sources indicated above.

About Liberty Global

Liberty Global is the leading international cable company, with operations in
13 countries. We connect people to the digital world and enable them to
discover and experience its endless possibilities. Our market-leading
television, broadband internet and telephony services are provided through
next-generation networks and innovative technology platforms that connect 20
million customers who subscribe to 35 million services as of December 31,
2012.

Liberty Global's consumer brands include UPC, Unitymedia, Kabel BW, Telenet
and VTR. Our operations also include Chellomedia, our content division, UPC
Business, a commercial services division, and Liberty Global Ventures, our
investment fund. For more information, please visit www.lgi.com or contact:

About Virgin Media

Virgin Media is the first provider of all four broadband, TV, mobile phone and
home phone services in the UK. The company’s cable network – the result of a
multi-billion pound private investment – delivers ultrafast broadband
connections to over half of all UK homes, with speeds of up to 100Mb, and is
being expanded to reach thousands more people across the country.

Virgin Media has developed the most advanced interactive television service,
bringing together broadcast TV, thousands of hours of on demand programming
and the best of the web in a single set-top box powered by TiVo. The company
was the first to offer HD TV and 3D on demand to millions of UK households.

Virgin Media operates the most popular virtual mobile network in the UK which,
when launched, was the world’s first such mobile phone service. It is also one
of the largest fixed-line home phone providers in the country, with a fast
growing B2B division servicing both private and public sector organizations.

Virgin Media Inc. is listed on the NASDAQ Stock Market and the London Stock
Exchange (VMED).

Contact:

Liberty Global
Investor Relations:
Christopher Noyes, +1 303-220-6693
Oskar Nooij, +1 303-220-4218
or
Media:
Hanne Wolf, Liberty Global, +1 303-220-6678
Bert Holtkamp, Liberty Global, +31-20-778-9800
Stanislas Neve de Mevergnies, Brunswick New York, +1 212-333-3810
or
Virgin Media Inc.
Investor Relations:
Richard Williams, +44 (0) 1256 753037
richard.williams@virginmedia.co.uk
or
Phil Rudman, +44 (0) 1256 752677
phil.rudman@virginmedia.co.uk
or
Media:
Michelle Gordon, +44 (0)20 7909 3292
michelle.gordon@virginmedia.co.uk
or
Gareth Mead, +44 (0)20 7909 3289
gareth.mead@virginmedia.co.uk
or
Tavistock
Matt Ridsdale, +44 (0) 20 7920 3150
mridsdale@tavistock.co.uk
or
Lulu Bridges, +44 (0) 20 7920 3150
lbridges@tavistock.co.uk
 
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