U.S. based cable operator Liberty Global, Inc. (LBTYA) said Friday that it has signed a share purchase agreement with Unity Media S.C.A to acquire Unitymedia GmbH, the second largest cable operator in Germany, for an aggregate consideration of about Euro 3.5 billion or US$5.2 billion.
Liberty Global said it will acquire all of the issued and outstanding capital stock of Unitymedia for an equity purchase price of Euro 2.0 billion or US$3.0 billion from its parent, which is owned by a group of shareholders led by BC Partners and Apollo Management. Considering Unitymedia's reported net debt of about Euro 1.5 billion or US$2.2 billion as on September 30, the total consideration adds up to Euro 3.5 billion or US$5.2 billion.
Englewood, Colorado-based Liberty Global expects the transaction to be completed in the first half of 2010, subject to regulatory approval.
Liberty Global plans to finance the transaction by means of debt financing on Unitymedia's business of around Euro 2.5 billion or US$3.7 billion. The net proceeds from the debt financing, after refinancing Unitymedia's existing debt and transaction costs, will be available to fund a portion of the equity consideration. The remaining equity purchase price could be funded from the available liquidity, the net proceeds from the sale of $750 million in convertible notes, and the sale of shares of Series A and Series C common stock to SPO Partners & Co., a large shareholder of Liberty Global, for gross proceeds of about US$128 million.
At September 30, Unitymedia had around 6.4 million Revenue Generating Units, including 4.5 million analog and digital basic cable subscribers and 1.9 million new service RGUs.
Commenting on the purchase deal, Mike Fries, Chief Executive of Liberty Global, said, "The addition of Unitymedia not only enhances our European presence, but adds significant scale to our global operations, as our footprint, including Unitymedia, will exceed 40 million homes."
Fries added that the company sees Unitymedia's growth to be meaningfully accretive to the overall profile of its European business, and to benefit from significant synergies in areas related to network operations and procurement.
Goldman Sachs is advising Liberty Global for matters concerning the acquisition.
On November 5, Liberty Global posted a third-quarter net loss of $120.3 million compared to a net loss of $308.9 million for the prior-year period, reflecting higher revenues and lower non-operating expenses.
LBTYA closed Thursday's regular trading hours at $23.10 on the NASDAQ.
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