Author Topic: LILA - Liberty Global Latin America tracker  (Read 98873 times)

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #120 on: November 16, 2015, 03:26:14 PM »
Thanks jay21!


ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #121 on: November 17, 2015, 06:47:00 AM »
So it looks like most of CWC will end up in LBTYA/LBTYK and about 20% or in LILA/LILAK.  Interesting comment in the release that the Liberty intergroup holding of CWC could end up getting spun out to LILA/LILAK shareholders eventually.

This is very cleverly structured if you look at it from the goal of maximizing your LiLAC holdings. As a normal minority shareholder you have an incentive to elect the Recommended Offer and then go for the LiLAC Alternative. If all the minority shareholders do this, however, they'll end up with a smaller percentage of LiLAC than the major shareholders (hint: take a look at the maximum amounts of LiLAC shares for each offer). If the minority shareholders saw this and, therefore, collectively elected either Dual Share Offer I or II they'd be even worse than by staying with the Recommended Offer + LiLAC Alternative. In other words, the fewer shareholders choose the Recommended Offer + LiLAC Alternative the more attractive it becomes, and vice versa. This is game theory at its finest.

It's almost certain that Malone and the other majority shareholders will end up with a larger than proportional LiLAC stake.
« Last Edit: November 17, 2015, 07:08:27 AM by ni-co »

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #122 on: November 17, 2015, 02:28:49 PM »
From the press release:
Quote
If the transaction closes, utilization of CWCs US and U.K. deferred tax assets would be restricted and we believe
that material realization of the benefits of those assets would be unlikely.

Any comments on this? They seem to imply that deferred tax assets will not be useful.

Liberty

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Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #124 on: November 18, 2015, 12:40:23 PM »
It is clearly a great deal for CWC shareholders and Malone, but given the lack of tax benefits, it begs the question: Is it a good deal for Liberty Global (Liberty Global Group & LiLAC Group) shareholders?

ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #125 on: November 18, 2015, 01:11:44 PM »
It is clearly a great deal for CWC shareholders and Malone, but given the lack of tax benefits, it begs the question: Is it a good deal for Liberty Global (Liberty Global Group & LiLAC Group) shareholders?

I don't doubt that. Europe has shown that quad play improves churn and therefore margins. Malone said at the LMCA shareholder meeting that he sees this as the future in all markets. It was really a very good opportunity for them to build out quad play in Latin America. Add to this the scale advandtages.

Besides, I get the impression that they undersell the tax benefits. Their statement that they won't be able to use them doesn't sound that absolute to me. Look at the clever wording. What they haven't said is that they'll loose the benefits. And I don't think that they really paid for them

https://m.youtube.com/watch?v=LAf0QnLFS7Q
« Last Edit: November 18, 2015, 01:19:52 PM by ni-co »

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #126 on: November 18, 2015, 01:53:16 PM »
Quote
I don't doubt that.

I understand the quad play synergies, but there is a big discrepancy between LiLAC's valuation before the deal (EV = 7.0 times EBITDA) and what they are paying for CWC  (optimistically EV = 9.2 times EBITDA assuming unrealized synergies). And LiLAC group's existing shareholders are giving up close to 75% of existing businesses valued at 7 times EBITDA to get 25% of CWC valued at 9.2 times EBITDA unless I am missing something.

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #127 on: November 18, 2015, 02:02:40 PM »
Existing LiLAC group shareholders owned $530M of EBITDA before the merger with CWC. After the merger, the New LiLAC group EBITDA is $1.4B, out of which 25.44% is owned by existing LiLAC shareholders, which puts their pro-rata share of EBITDA at $350 $356M. So the growth rate of EBITDA has to be very high post-merger relative to growth rate w/o CWC to justify this.

ni-co

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Re: LILA - Liberty Global Latin America tracker
« Reply #128 on: November 18, 2015, 02:03:20 PM »
Quote
I don't doubt that.

I understand the quad play synergies, but there is a big discrepancy between LiLAC's valuation before the deal (EV = 7.0 times EBITDA) and what they are paying for CWC  (optimistically EV = 9.2 times EBITDA assuming unrealized synergies). And LiLAC group's existing shareholders are giving up close to 75% of existing businesses valued at 7 times EBITDA to get 25% of CWC valued at 9.2 times EBITDA unless I am missing something.

The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x. However, I agree with you that a cash deal would have been better for LILA shareholders. But Malone wouldn't have sold for the same amount in cash because he's looking at after tax returns.

Munger_Disciple

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Re: LILA - Liberty Global Latin America tracker
« Reply #129 on: November 18, 2015, 02:08:30 PM »
Quote
The deal is not completely paid for with LiLAC shares and LBTYA doesn't trade at 7x.

I realize that but still it appears hugely dilutive to current LiLAC shareholders. See my previous post. They are giving up nearly $174M of EBITDA.