Current price: $26.38
Tender Price: $25.25 -$29.00
Upside: 10% (if priced at the upper limit)
Expiration Date: 9th of Sep, 2019
Highlighting yet another dutch tender offer with odd-lot provision (this summer seems to be quite generous with those).
Liberty Global Plc is buying back $2.5bn of its stock following the sale of some of its operations to Vodafone ($21bn gross amd $11bn in net proceeds).
- 10.5%-12.1% of it’s Class A shares (ticker LBTYA – $625m buyback) and;
- 12.8% – 14.8% of it’s Class C shares (ticker LBTYK – 1,875m buyback).
Shares of both classes currently trade closer to the lower tender limit.
As there seems to be separate tender for both classes of shares, tendering odd-lot amounts in both classes should still result in priority buyback with no proration.
Liberty Global is a widely followed large cap ($19bn) company that owns cable and telecom businesses across Europe (mainly UK, Belgium and Netherlands). Malone is chairman with 28% control of the company through Class B voting shares and c. 4% economic interest. Neither he nor CEO (7% voting control and 1.3% economic interest) nor any other directors will participate in the tender.
Following the already announced divestments, Liberty Global will be much more streamlined and will have three quarters of it’s market cap in net cash (see recent presentation here – net cash at $14.4bn). This leads to EV of only $4.5bn. Remaining businesses/investments are projected to generate $550m-$600m in adjusted FCF (slide 17). So at current levels the company clearly does not look expensive and this might be not the only buyback that Malone carries out if prices remain at current levels.
(I know way too little on Liberty Global to add further color on valuation and prospects. But there should be plenty of info available from Malone fans who have been following the company for years)
Adding these up, I think there is a decent chance that the tender will end up being priced closer to the upper limit than the current share price.
Also one might consider buying Liberty Global as a longer term investment given streamlined operations, buybacks and most importantly Malone at the wheel of cash balance equivalent to 3/4 of market cap.