Liberty Global Plc (LBTYA & LBTYK) – Odd Lot Tender Offer – 10% Upside

Current price: $26.38

Tender Price: $25.25  -$29.00

Upside: 10% (if priced at the upper limit)

Expiration Date: 9th of Sep, 2019

Tender Document

 

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.

16 COMMENTS

  1. YVRtrader

    I’m sure you’re aware, but auction prices are slightly different for each share class:

    LBTYA 25.25 – 29.00
    LBTYK 24.75 – 28.50

    1. dt

      Yes, forgot to add a note on that. Upside is the same for both classes, but tender range and current share price differs.

  2. Vincent

    Is it possible to participate for odd lot for both A and K shares? Anyone has experience?

  3. qq648994727

    cannot receive the offer
    there is IB reply:
    #Interactive Brokers is aware of the tender offer, however the Corporate Actions Tool is not available for online elections as we are waiting for management review and approval. Once approved by management, it will be available for online elections. #
    does anyone have the same situation?

    1. nmeile

      Usually takes them a couple of days after publication of the tender offer. No worries, still time left!

  4. Aidan

    If I’m to buy early during trading on Monday, will that leave me enough time to tender (perhaps Monday afternoon)? I’m with IB. Thanks

    1. slow

      Yes. You can buy them at IB tomorrow and tender. Do it as early as possible if you don’t want to call them to tender.

    2. nmeile

      Deadline to tender @ IB is Sep 9, 1pm EDT
      However, it seems as if both shares already moved quite a bit since this was posted, risk/reward profile may have changed.

  5. Terence

    Tender prices turned out very close to trading prices – a little higher than yesterday’s (Sept 9 deadline day) close, but lower than today’s (Sept 10) close – for both stocks. Thus, gain is almost the same whether you bought and tendered, or bought and sold. (No gain for Aidan if he did buy on 9/9, unless he missed the IB deadline to tender and sold today!) In fact the gain for the past weeks is roughly the same as the total market.

    Even with this hindsight, I would say it was still a good low-risk odd lot opportunity especially that Liberty shares seem undervalued. Just stating the obvious fact that not all odd lots provide the extra reward for the work. But in the end, a gain is a gain!

    https://finance.yahoo.com/news/liberty-global-announces-preliminary-results-124500803.html

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