John Malone's Liberty Global in talks to acquire London-listed CWC for about £3.7bn

Cable tycoon John Malone's Liberty Global has confirmed that it is in discussions with the board of London-listed Caribbean telecoms operator, Cable and Wireless Communications (CWC), to buy its entire issued and to be issued share capital. The potential takeover deal that is valued at £3.7bn (€51.bn,$5.7bn) could be financed through a combination of cash and equity.

The deal would allow Liberty to create a larger operational unit by combining CWC with its Latin American assets in Puerto Rico and Chile. This way it could compete better and pose a stronger challenge to its peers in the region that include the Mexican tycoon Carlos Slim and Spain's Telefonica.

Also, Liberty which has most of its networks in Europe, including Virgin Media, would be able to shift its balance a little westward through the acquisition. Malone already holds a 13% stake in CWC, after it accepted shares last year in exchange for a controlling stake in Malone's Caribbean cable operator, Columbus Communications.

This is not the first acquisition for Liberty which has been on a buying spree over the past one year during which it has agreed to acquire TV3, an Irish broadcaster, apart from purchasing shares in British broadcaster ITV and in production house All3Meida. In addition to content, Liberty has been lapping up some telecom deals such as the acquisition of Belgian mobile-phone operator BASE Company in April of this year.

Virgin Media

Other large acquisitions in recent years include the purchase of the UK's Virgin Media and Dutch cable operator Ziggo. These acquisitions are in line with Liberty's goal to become a media and content-distribution giant which has allowed it to become the largest international cable operator with 27 million customers across 14 countries.

CWC on the other hand is a byproduct of the old Cable & Wireless company which was split in two after it was saddled with debts and was enmeshed in controversy over executive pay. While the old company's network and international submarine cables businesses were sold to Vodafone, its mobile and fixed line operations were hived off to form CWC.

CWC then decided to focus only on its Caribbean operations by selling its assets in Macau and Monaco. It also shifted its management headquarters from London to Miami to attract American investors seeking equity growth.

Chief executive of CWC, Phil Bentley, had hinted at a takeover approach earlier in the year. "We're a big fish in our little Caribbean sea. We've got to just play our game in the region and if one of the global players comes knocking on our door, then so be it. If someone then puts enough money on the table then so be it. Nobody is immune from takeover interest."