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LBTYA Closes OneLink Acquisition

LBTYA BT

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With the clearance of regulatory approval, LGI Broadband Operations, Inc. – the business arm of Liberty Global Inc. (LBTYA - Analyst Report) completed the pending acquisition of OneLink Communications for a total consideration of about $585 million.

The completion of the deal will expand Liberty Global’s market share in Puerto Rico to 70%, hence making it one of the largest operators in the island. Subsequently, OneLink will be included with LGI’s existing business.

In the recent past, Liberty Global pursued a few major acquisitions, which resulted in some financial constraints for the company. Consequently, the company has joined forces with private investment group Searchlight Capital Partners, L.P. to buy full stake in OneLink Communications.

Liberty Global initiated its business restructuring from early 2010. At present, the company is concentrating primarily in Europe and Latin America while divesting operations in other parts of the world.

Germany is one of the major growth areas for Liberty Global, where it completed two major acquisitions. Liberty Global acquired UnityMedia GmbH and Kabel Baden-Wuerttemberg GmbH & Co. KG, the second and third largest cable TV companies in Germany, respectively. Recently, it is rumored that Liberty Global is planning to bid for Ziggo, the market leading cable operator in Netherlands. The acquisition of Ziggo would virtually place Liberty Global at the helm of the Dutch cable TV market.

Western Europe has become a lucrative market for cable operators. These markets are witnessing growing demand for pay-TV services together with triple-play bundled services that combines basic cable TV, Internet and telephony. In the forthcoming years, we believe Liberty Global’s revenue will continue to benefit from a "triple play" of video, broadband and telephone, as it signs up more “bundled” customers in Europe. 

However, moving ahead, deteriorating European economy and stiff competition from Virgin Media Inc. and BT Group plc. (BT - Snapshot Report) may act as headwinds for the company.We thus maintain our long-term Neutral recommendation on Liberty Global.

Currently, Liberty Global has a Zacks #2 Rank, implying a short-term Buy rating on the stock.

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