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Liberty Global's Merger & Buyout Plans Bode Well, Risks Stay
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On Dec 12, we issued an updated research report on Liberty Global plc. (LBTYA - Free Report) , a leading cable MSO with operations in Europe and Latin America.
What’s Driving Growth at Liberty Global?
The launch of DOCSIS 3.1 network services, the joint venture with Vodafone Group Plc. (VOD - Free Report) in the Netherlands, the acquisition of UTV Ireland TV stations from ITV, and the takeover of Cable & Wireless are expected to drive growth at Liberty Global. These merger and acquisitions plans of the company look impressive.
In October, Liberty Global entered into a definitive agreement to acquire the cable business of Multimedia Polska S.A. for a consideration of approximately $760 million. Notably, Multimedia Polska is the third largest cable TV operator in Poland. The all-cash transaction is likely to be completed in the next one year, subject to customary regulatory clearances.
In Sep 2016, Liberty Global reached a long-term agreement with Netflix Inc. (NFLX - Free Report) wherein the latter will be allowed to offer its content on the former’s cable network. The service will be available in 30 countries in which Liberty Global operates, starting from the Netherlands and gradually expanding to other regions. Note that Netflix, at the beginning of November, announced its integration into Comcast Corp.’s (CMCSA - Free Report) cloud-based managed video delivery X1 platform.
Challenges
Shares of Liberty Global have underperformed the Zacks-categorized Cable TV industry on a year-to-date basis due to multiple headwinds that have hurt the stock this year. The stock has lost 29.70%, lagging the industry’s growth of 16.35% over the same period.
Liberty Global’s predominant operation in Europe is a major concern because of the prevalence of recessionary pressure, debt crisis and low per capita income in several European countries. Further, stiff competition in the video, broadband, fixed-line telephony and mobile services business and foreign exchange rate risks remain major dampeners.
Liberty Global’s top line and EBITDA growth may become volatile in the near future, or may be weighed down by the maturing Western European operations, which account for a majority of the company’s total revenue. Moreover, the company’s recent acquisitions may certainly give rise to integration risks.
To Conclude
We believe the company’s merger and acquisition plans bode well for its long-term growth. However, the multiple headwinds that it faces hurt the stock and have been the reason behind Liberty Global carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Liberty Global's Merger & Buyout Plans Bode Well, Risks Stay
On Dec 12, we issued an updated research report on Liberty Global plc. (LBTYA - Free Report) , a leading cable MSO with operations in Europe and Latin America.
What’s Driving Growth at Liberty Global?
The launch of DOCSIS 3.1 network services, the joint venture with Vodafone Group Plc. (VOD - Free Report) in the Netherlands, the acquisition of UTV Ireland TV stations from ITV, and the takeover of Cable & Wireless are expected to drive growth at Liberty Global. These merger and acquisitions plans of the company look impressive.
In October, Liberty Global entered into a definitive agreement to acquire the cable business of Multimedia Polska S.A. for a consideration of approximately $760 million. Notably, Multimedia Polska is the third largest cable TV operator in Poland. The all-cash transaction is likely to be completed in the next one year, subject to customary regulatory clearances.
In Sep 2016, Liberty Global reached a long-term agreement with Netflix Inc. (NFLX - Free Report) wherein the latter will be allowed to offer its content on the former’s cable network. The service will be available in 30 countries in which Liberty Global operates, starting from the Netherlands and gradually expanding to other regions. Note that Netflix, at the beginning of November, announced its integration into Comcast Corp.’s (CMCSA - Free Report) cloud-based managed video delivery X1 platform.
Challenges
Shares of Liberty Global have underperformed the Zacks-categorized Cable TV industry on a year-to-date basis due to multiple headwinds that have hurt the stock this year. The stock has lost 29.70%, lagging the industry’s growth of 16.35% over the same period.
Liberty Global’s predominant operation in Europe is a major concern because of the prevalence of recessionary pressure, debt crisis and low per capita income in several European countries. Further, stiff competition in the video, broadband, fixed-line telephony and mobile services business and foreign exchange rate risks remain major dampeners.
Liberty Global’s top line and EBITDA growth may become volatile in the near future, or may be weighed down by the maturing Western European operations, which account for a majority of the company’s total revenue. Moreover, the company’s recent acquisitions may certainly give rise to integration risks.
To Conclude
We believe the company’s merger and acquisition plans bode well for its long-term growth. However, the multiple headwinds that it faces hurt the stock and have been the reason behind Liberty Global carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>