Liberty Global Ltd. · NASDAQ:LBTYA
Liberty Global — Merger or Acquisition (February 2013)
39 slides from Liberty Global's merger presentation, Feb 6, 2013
Slide 1: Creation of the world's leading broadband communications company
Creation of the world’s leading broadband communications company February 6, 2013
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the transaction and the anticipated consequences and benefits of the transaction, the targeted close date for the transaction,
Slide 3: Presenters
Presenters Michael T. Fries Neil A. Berkett President & Chief Executive Officer Chief Executive Officer Liberty Global & Virgin Media | February 6, 2013 3
Slide 4: Agenda: Transaction Rationale
Agenda • Transaction Rationale • Virgin Media Highlights • Liberty Global Highlights • Transaction Summary
Slide 5: A Powerful Combination
A Powerful Combination • Creation of the world’s leading broadband communications company • Complementary strengths across video, voice & broadband products • Significant potential to monetize customer base • Substantial synergy opportunity • Accretive to free cash flow • Strengthened commitment to
Slide 6: World's Leading Cable Operator
World’s Leading Cable Operator Scale advantage drives innovation & operating leverage # of customers (mm) 25 20 5 Ono LGI + VMED Liberty Global TWC KDG Charter Comcast Virgin Media Cablevision Ziggo Liberty Global & Virgin Media | February 6, 2013 6
Slide 7: Focus on Europe's Strongest Markets
Focus on Europe’s Strongest Markets Stable economic & regulatory climates, healthy growth profile Nearly 80% of revenues Largest Cable Operator from 5 markets in 9 of 12 European countries Liberty Global & Virgin Media | February 6, 2013 7
Slide 8: Complementary Core Strengths
Complementary Core Strengths Aligned triple-play product suite, roadmap & expertise Leading the Delivering the Great success with digital TV experience fastest broadband speeds compelling bundles Liberty Global & Virgin Media | February 6, 2013 8
Slide 9: Meaningful Upside from Sub Growth
(1) Meaningful Upside from Sub Growth (2) Combined (In millions) Homes Passed 34 13 47 Customers 20 5 25 Cable RGUs 35 12 47 Video 18 4 22 Broadband 9 4 14 Voice 7 4 11 Bundling Ratio 1.8x 2.5x 1.9x Mobile 1 3 4 (1) Statistics as of December 31, 2012 based on each entity’s subscriber counting polici
Slide 10: Additional Growth Opportunities
Additional Growth Opportunities Mobility & B2B offer growth potential beyond traditional triple-play Mobile cross-selling expertise Pan-European B2B potential Mobile revenue as % of total revenue B2B revenues as % of total revenue 16% 14% 6% 2% (1) (2) Virgin Media Liberty Global Virgin Media Libert
Slide 11: Substantial Cost Synergies
Substantial Cost Synergies Targeting ~$180 million of annual synergies(1) • Cost synergies of ~$110 million between LGI & VMED operations • Driven across core functional areas including network, IT support & procurement • CapEx savings of ~$70 million • Efficiencies derived from increased scale • St
Slide 12: Focused on Shareholder Returns
(1) Focused on Shareholder Returns VMED Repurchases LGI Repurchases Combined repurchases (in $ billions) (in $ billions) $1.1 >$10 bn since ’05 $1.0 $1.0 $1.0 Target leverage(2) 4x to 5x $0.5 2-year target upon close $0.3 $3.5 bn 2010 2011 2012 2010 2011 2012 (1) Please see Appendix for the definiti
Slide 13: Agenda: Virgin Media Highlights
Agenda • Transaction Rationale • Virgin Media Highlights • Liberty Global Highlights • Transaction Summary
Slide 14: Proven Leader in Attractive UK Market
Proven Leader in Attractive UK Market The UK Market Virgin Media • 26 mm total homes in footprint Virgin passes 50% of homes • Stable, rational competitive landscape Triple-play leader – industry leading ARPU • Favorable pricing environment Annual history of price increases • Strong demand for broad
Slide 15: Multiple Drivers of Operating Growth
Multiple Drivers of Operating Growth Five Key Drivers Q4 Results Customer • Strong net customer adds of 43k 1 BEST TV - TiVo Growth • Disconnects down 22k, with churn at 1.1% • Pricing underpinned by product differentiation FASTEST Pricing • Price inflation is occurring in UK Telecoms 2 • Fibre & co
Slide 16: Strong Momentum Looking Ahead
Strong Momentum Looking Ahead 2013 Outlook Superior network Product differentiation • Revenue: Growth should improve through 2013 Strong • Customer growth: Sustainable part of revenue mix brand • Price: Increased by ~5% from February 1 Fixed/mobile convergence • B2B: Underlying revenue growth contin
Slide 17: Opportunity for VMED Shareholders
Opportunity for VMED Shareholders Attractive value now; exposure to compelling growth equity story • Multiple drivers of revenue growth A shared • Operational leverage commitment to • Disciplined approach • Greater diversity of revenue value creation to CapEx & costs drivers across multiple geograph
Slide 18: Agenda: Liberty Global Highlights
Agenda • Transaction Rationale • Virgin Media Highlights • Liberty Global Highlights • Transaction Summary
Slide 19: Building Scale in Western Europe
Building Scale in Western Europe Two-thirds of revenue from four strategic countries • Germany, Belgium, Switzerland & the Netherlands Liberty Global Revenue • Industrial heartland of Europe; strong demographics “Big Four” driving growth(1) • Additional M&A consolidation opportunities Rational compe
Slide 20: Track Record of Performance
(1) Track Record of Performance Since 2009 • Organic RGU additions of 3.6 mm Organic RGU Additions • Over 50% increase in reported OCF to $4.9 bn in 2012 Bundling driving record results • ~2.5-fold expansion in reported Adj. FCF since 2009 1,594 (000s) Q4 2012 Results 465 1,192 • Record quarter with
Slide 21: Sustainable Operating Momentum
Sustainable Operating Momentum Substantial RGU (subscriber) growth opportunity • Digital upside with over 8 mm analog RGUs • Significant runway with low broadband & voice penetrations Video Opportunity(1) Innovation driving growth Stable pricing Other 0.8 mm • Continued ARPU/customer growth with bun
Slide 22: Agenda: Transaction Summary
Agenda • Transaction Rationale • Virgin Media Highlights • Liberty Global Highlights • Transaction Summary
Slide 23: Key Transaction Terms & Valuation
Key Transaction Terms & Valuation Structure & Consideration Valuation • Liberty Global to acquire Virgin • $47.87 per Virgin Media share(2) (2) Media in cash & stock merger • 24% premium to closing price • Virgin Media shareholders receive • Implied Virgin Media equity value of for each share: $16.0
Slide 24: Key Transaction Terms (Cont.)
Key Transaction Terms (Cont.) Pro Forma Ownership Parent Company • LGI shareholders expected to own ~64% • Redomicile to the UK • VMED shareholders expected to own ~36% • Remain listed on NASDAQ Governance Path to Completion • One Virgin Media Board member to join • Transaction subject to majority L
Slide 25: Pro Forma Capitalization
Pro Forma Capitalization Combined PF fully-diluted equity market capitalization of ~$27.9 bn • PF Series A common stock: $16.1 bn market cap (231 mm shares outstanding) • Series B common stock: $0.7 bn market cap (10 mm shares outstanding) • PF Series C common stock: $11.2 bn market cap (173 mm shar
Slide 26: Financial Strength Across Key Metrics
(1) Financial Strength Across Key Metrics 2012 Results (2) (unaudited) Combined (In billions, unless %) Revenue $10.3 $6.5 $16.8 OCF $4.9 $2.7 $7.5 OCF margin 47.2% 41.0% 44.8% CapEx $1.9 $1.2 $3.1 CapEx/Revenue 18.3% 19.1% 18.6% Adjusted FCF $1.0 $0.5 $1.5 (1) LGI amounts are on an as reported basi
Slide 27: Combination Delivers Strong Outlook
Combination Delivers Strong Outlook Mid-single digit rebased revenue growth Mid-single digit rebased OCF growth Capital intensity to decline Mid-teens free cash flow growth Liberty Global & Virgin Media | February 6, 2013 27
Slide 28: Powerful Combination
Powerful Combination The world’s leading broadband Complementary strengths communications company across video, voice & data Significant potential to Substantial synergy opportunity monetize customer base Strengthened commitment Accretive to free cash flow to shareholder returns Liberty Global & Vir
Slide 29: Appendix
Appendix
Slide 30: Liberty Global's Appendix
Liberty Global’s Appendix Definitions and Additional Information Revenue Generating Unit (“RGU”) is separately postpaid subscriber identification module (“SIM”) services that are the same or similar to the mass an Analog Cable Subscriber, Digital Cable cards in service in Belgium, Germany, Chile, ma
Slide 31: Liberty Global's Appendix
Liberty Global’s Appendix Definitions and Additional Information Information on Rebased Growth: For purposes revenue and OCF for the three months ended businesses during the pre-acquisition periods, no of calculating rebased growth rates on a December 31, 2011 include KBW, OneLink and assurance can
Slide 32: Liberty Global's Appendix (Cont.)
Liberty Global’s Appendix (Cont.) Liberty Global’s Operating Cash Flow Definition and Reconciliation Operating cash flow is the primary measure used assets, (ii) direct acquisition costs, such as third- to investors because it is one of the bases for by our chief operating decision maker to evaluate
Slide 33: Liberty Global's Appendix (Cont.)
Liberty Global’s Appendix (Cont.) Liberty Global’s Free Cash Flow and Adjusted Free Cash Flow Definitions and Reconciliations(*) We define free cash flow as net cash provided by We believe that our presentation of free cash flow operations’ net cash provided by operating our operating activities, pl
Slide 34: Liberty Global's Appendix (Cont.)
Liberty Global’s Appendix (Cont.) Footnotes to previous CapEx page 1) Excess tax benefits from stock-based 1) The capital expenditures that we report in compensation represent the excess of tax our consolidated cash flow statements do deductions over the related financial not include amounts that ar
Slide 35: Virgin Media's Appendix
Virgin Media’s Appendix Definitions and Additional Information Average Revenue Per Unit ("ARPU") is average Quad-play customers are cable triple households monthly revenue per average customer which have at least one Virgin Mobile service relationship and is calculated on a quarterly basis (contract
Slide 36: Virgin Media's Appendix (Cont.)
Virgin Media’s Appendix (Cont.) Virgin Media’s Free Cash Flow Definition and Reconciliation The following tables present the reconciliations of non-GAAP financial measures to their nearest Virgin Media uses certain financial measures with a view to providing investors with a measure of financial per
Slide 37: Virgin Media's Appendix (Cont.)
Virgin Media’s Appendix (Cont.) Virgin Media’s Operating Cash Flow based on Liberty Global’s Definition and Reconciliation Operating cash flow is the primary measure used assets (ii) direct acquisition costs, such as third- operating cash flow measure is useful to investors by Liberty Global’s chief
Slide 38: Virgin Media's Appendix (Cont.)
Virgin Media’s Appendix (Cont.) Virgin Media’s Free Cash Flow using Liberty Global’s Definitions and Reconciliations (*) Liberty Global defines free cash flow as net cash item excluding any cash provided or used by arrive at this amount. Investors should view free provided by operating activities, p
Slide 39: Virgin Media's Appendix (Cont.)
Virgin Media’s Appendix (Cont.) Footnotes to previous page CapEx 1) Excess tax benefits from stock-based 1) The capital expenditures that we report compensation, cash payments for direct in our consolidated cash flow acquisition costs, principal payments on statements do not include amounts that ven
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