Term Sheet

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Liberty Global to buy UK's Virgin Media

February 5, 2013: 9:20 PM ET

Liberty Media's John MaloneDeal marks the second mega-buyout this week, expands John Malone's empire

FORTUNE -- Liberty Global (LBTYA) today agreed to acquire UK- based cable company Virgin Media (VMED) for $23.3 billion, a move that signals the market is willing to support big, high-price deals and also creates one of the world's largest broadband communications companies.

Liberty's announcement about the acquisition was released just hours after computer maker Dell Inc. (DELL) said it was being taken private by a consortium that includes private equity firm Silver Lake, Microsoft (MSFT), and the company's founder Michael Dell.

Combined, the two deals should boost Wall Street confidence in the strength of the financial markets and the economy.

By buying Virgin Media, Liberty – which owns media properties across Europe – will become a major player in Europe's telecommunications, broadband and television markets, covering 47 million homes and serving 25 million customers across 14 countries.

As part of the deal, Liberty would would become domiciled in the UK by becoming a subsidiary of a new holding company. It currently is incorporated in Delaware, although its corporate headquarters are in Englewood, Colorado.

"Virgin Media will add significant scale and a first-class management team in Europe's largest and most dynamic media and communications market," Mike Fries, President and CEO of Liberty Global, said in a statement. After the deal, roughly 80% of Liberty Global's revenue will come from just five countries: UK, Germany, Belgium, Switzerland and the Netherlands.

Liberty executives said the deal will allow the company to do more share buybacks, with an initial target of approximately $3.5 billion over a two-year period after it acquires Virgin Media.

As the Financial Times reports, the deal also creates a strong competitor to Rupert Murdoch's News Corp. (NWS), which owns the largest cable company in the UK, BSkyB.

A dealmaker's coming out

The Liberty-Virgin acquisition also marks a major step forward for Aryeh Bourkoff, the former head of head of investment banking for the Americas at UBS (UBS). Bourkoff's boutique advisory firm LionTree Advisors acted as lead financial advisor to Liberty Global on this massive deal.

LionTree has been involved in smaller transactions. This January the firm worked with Jefferies to advise the private equity firm Rizvi Traverse Management on its deal for a majority stake in the music rights company SESAC for $600 million. In December, Bourkoff and LionTree advised Ryan Seacrest and the Seacrest Global Group when it bought a majority stake the advertising agency Civic Entertainment Group. Last summer, the Canada Pension Plan and private equity firm BC Partners bought a stake in Suddenlink Communications for $2 billion, with LionTree and Goldman Sachs advising Suddenlink.

But the Liberty transaction is far larger and more high-profile than LionTree's previous deals; and it's a coming out party of sorts for Bourkoff, who quit UBS last April and launched his own firm in July.

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About This Author
Katie Benner
Katie Benner
Writer, Fortune

Katie Benner joined Fortune in October 2006. As a writer for the magazine and the website, she focuses on Wall Street and the economy. Prior to joining Fortune, Benner worked at TheStreet.com, CNNMoney, and as a freelancer in Beijing for China International Business, the South China Morning Post, and as a columnist for Beijing Review. She has a B.A. in English from Bowdoin College.

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