Annelies van der Pauw ()
Annelies van der Pauw, 53, the head of Allen & Overy’s Amsterdam corporate department.
Liberty Global, the Englewood, Colo.-–based media giant led by billionaire cable television pioneer John Malone.
Liberty has agreed to pay roughly $9.4 billion to acquire the 71.5 percent stake in Ziggo—the Netherlands’ largest cable provider—it does not already own.
Under the terms of the transaction, which was announced on Jan. 27, Liberty will pay about $15.05 in cash, along with 0.2282 of its own Class A shares and 0.5630 of its Class C shares, for each Ziggo share. The deal values Utrecht-based Ziggo at $47.23 per share, and $13.7 billion overall. That figure reflects a 22 percent premium over the target company’s closing price on Oct. 15—the day before Ziggo disclosed that Liberty had presented it with a takeover offer. (Ziggo rejected that offer as “inadequate.”) The deal is expected to close in the second half of 2014, pending the approval of various regulators, including the European Commission.
Ropes & Gray is also representing Liberty, advising the company on financing aspects of the deal. Freshfields Bruckhaus Deringer is acting as lead deal counsel to Ziggo on the sale, while Shearman & Sterling is advising the target company on financing aspects of the deal and Dutch firm Stibbe is representing Ziggo’s supervisory board. Clifford Chance and Nauta Dutilh landed roles on the deal representing financial advisers.
THE BIG PICTURE
Liberty plunked down $807 million for a 12.7 percent stake in Ziggo last March, and Malone has been keen to increase his company’s holdings in the Dutch cable provider ever since. Liberty disclosed in a U.S. Securities and Exchange Commission filing last July that it had increased its Ziggo stake to 28.5 percent through a series of share purchases. The U.S. company approached Ziggo with its initial takeover bid shortly after that. Despite seeing that offer rebuffed, Liberty maintained its interest in a deal. The companies began negotiating terms at the end of 2013, which led to reports in early January suggesting that a deal was nearly at hand.
Liberty expects to combine Ziggo with existing subsidiary UPC Netherlands, the country’s second-largest cable provider. The combined company is expected to reap a total of $3.4 billion in annual revenue in the Netherlands and would reach about 7 million homes, or 90 percent of the country’s households.
Liberty already has a robust presence in Europe, collecting more than 90 percent of its revenue there. The Malone-led company paid $23.3 billion last year to acquire Virgin Media, expanding its U.K. footprint and positioning itself as a rival to British Sky Broadcasting in the process. That deal followed Liberty’s acquisition of Germany’s Unitymedia for $5.2 billion in 2009 and preceded the company’s attempt to acquire Kabel Deutschland Holding, the country’s largest cable operator. Kabel Deutschland opted instead to be acquired by Vodafone in a nearly $10.6 billion deal announced in June. Liberty also bought Germany’s Kabel Baden-Wuerttenberg for $4.2 billion in 2011 and recently increased its stake in Belgian cable company Telenet to 58 percent.
There are signs that the Ziggo takeover may have sated Liberty’s hunger for large European acquisitions. The company’s chief financial officer told Reuters in November that—outside of a potential deal for Ziggo, which Liberty still had in its sights at the time—there were no major transactions on the continent being considered.
Van der Pauw and A&O began working with Liberty after the company bought out United Pan-Europe Communications (now UPC) in 2005. The A&O partner had by that point developed a strong relationship with UPC, working, for instance, on the company’s initial listings on both the Amsterdam stock exchange and Nasdaq in 1999 and then advising on a variety of corporate matters.
Since Liberty took over UPC, A&O has regularly advised the company on corporate transactions and regulatory matters in the Netherlands. The firm’s work for Liberty has included representing the company in connection with the sale of its stake in Australian subsidiary Austar to Foxtel in a deal valuing the company at $2.7 billion. A&O also advised a group of underwriting banks that arranged the financing for Liberty’s purchase of Virgin Media last year.
The Van der Pauw-led A&O team has been advising Liberty on its pursuit of Ziggo since the U.S. company first approached the Dutch target about a takeover last summer. Considering the relationships that have developed between the lawyers in the firm’s Amsterdam office and Liberty’s in-house team, Van der Pauw says “it is quite easy to have a full team up to speed and on board” when a potential transaction arises. In the case of Ziggo, of course, the parties and the firms advising had to deal with an initial rejected offer and negotiations that stopped and started, as well as close media scrutiny of those talks.
Van der Pauw acknowledges that the process was choppy. “It has been off and on, basically,” she says. But she adds that those conditions are relatively normal for a large, high-profile transaction—even one where the two parties are as familiar with one another as Ziggo is with Liberty.
It remains to be seen whether European regulators will look favorably on the deal, which gives one entity control over 90 percent of a single country’s cable market. Liberty does not seem overly concerned about winning regulatory approval. Indeed, in announcing the acquisition, the company expressed confidence that it will obtain the blessings of the European Commission and other government bodies. Without that confidence, Van der Pauw says, Liberty would most likely not have sought to make the deal: “Clearly, Liberty wouldn’t do this transaction if they didn’t think that they would get competition clearance.”