UnitedGlobalCom Shares Soar on Strategic Investment from Liberty Media Group and Microsoft

Strategic Insights -

Shares of Denver-based UnitedGlobalCom Inc. surged another 21 percent on Tuesday after the company announced a deal that adds John Malone, chair of Liberty Media Group, and Microsoft's Chief Financial Officer Greg Maffei to its board of directors. The investment, valued at $493 million, establishes a joint venture between Liberty Media Group, Microsoft, and United Pan-Europe Communications NV, with the two largest stakeholders owning 25 percent each, while United Pan-European will own 50 percent. The deal also grants additional voting rights to the B shares held by the venture, allowing it to control about 35 percent of the shareholder's vote, despite only owning 14.5 percent of the company's stock.

Key Takeaways:

  • The joint venture between Liberty Media Group, Microsoft, and United Pan-Europe Communications NV will own 14.5 percent of UnitedGlobalCom, marking a significant investment in the European broadband marketplace.
  • The deal grants Liberty Media International Inc. international distribution channels for its cable programming assets and UnitedGlobalCom improved content capabilities.
  • Microsoft gains a stronger grip on cable modem access to European homes.
  • The price of the investment, $100 per share, represents a 35 percent premium over UnitedGlobalCom's publicly traded A shares, which closed at $73.75 on Friday.
  • The venture will control about 35 percent of the shareholder's vote at UnitedGlobalCom despite only owning 14.5 percent of the company's stock.
  • UnitedGlobalCom's share price surged 21 percent on Tuesday, extending the company's gains in 1998, where it has been ranked as one of the most undervalued plays in the broadband sector.
  • The deal is seen as a vote of confidence in UnitedGlobalCom's strategy and prospects.

Statistics:

  • UnitedGlobalCom shares increased by 21 percent following the announcement.
  • The joint venture will own 14.5 percent of UnitedGlobalCom.
  • The price of the investment is $100 per share, a 35 percent premium over UnitedGlobalCom's A shares.
  • UnitedGlobalCom's A shares closed at $73.75 on Friday.
  • The venture will control about 35 percent of the shareholder's vote at UnitedGlobalCom.

Sources:

  • "Stock Watch" article in a local newspaper
  • UnitedGlobalCom Inc. press release on partnership with Liberty Media Group and Microsoft (NO DATE)
  • Interview with Mark Greenberg, manager of the Invesco Leisure Fund (NO DATE)
  • Interview with Ted Henderson of Janco Partners Inc. (NO DATE)
  • Interview with Miranda Curtis, president of Liberty Media International Inc. (NO DATE)