LBTYB Liberty Global Ltd

Cable tycoon John Malone's Liberty Global PLC agreed to buy Caribbean cable operator Cable & Wireless Communications PLC for $5.3 billion, strengthening the acquisitive company's foothold in an emerging market ripe for additional consolidation.

The companies said in a statement Monday that the stock offer is valued at 78.04 pence a share—a 6% premium to Cable & Wireless's Monday closing price of 73.54 pence in London, where it trades.

The deal also includes a special dividend of 3 pence a share that will be paid when the transaction closes, bringing the total consideration to 81.04 pence per share. Liberty Global said the full offer represents a 40% premium to Cable & Wireless' closing share price on Oct. 21, the day before The Wall Street Journal first reported that the companies were in talks. Including net debt, the deal is valued at $8 billion.

Cable & Wireless, which has more than 6 million subscribers, offers pay-television, Internet, landline phone and wireless service—the so-called "quad play"—in the Caribbean, Panama, Monaco and the Seychelles, according to its website. Liberty Global executives have been keenly focused on the need to offer a "quad play" eventually in all the company's territories, which stretch across Europe, Latin America and the Caribbean. The combined company will have 10 million subscribers in the Caribbean and Latin America.

In an interview, Liberty Global Chief Executive Mike Fries touted the deal as a "unique platform to start looking at additional consolidation" of cable assets in the Latin American and Caribbean region, which he described as "fragmented" and "underpenetrated."

Mr. Fries highlighted Cable & Wireless' valuable and sprawling network of undersea cables in the region, which will allow Liberty Global to capitalize on exploding broadband data consumption.

The pending deal, which offers Cable & Wireless shareholders a mix of several Liberty shares, is subject to regulatory approval by several smaller and bigger government entities in the Caribbean. The companies expect the transaction to close in the second quarter.

Liberty Global recently created a separate tracking stock dubbed LiLAC to track its Latin American and Caribbean holdings, which also include cable companies in Puerto Rico and Chile. The stock has dropped since its debut in July, though it has rebounded somewhat since The Wall Street Journal reported on the talks with Cable & Wireless. Cable & Wireless will be attributed to the LiLAC stock.

The deal will personally benefit Mr. Malone, Liberty Global's chairman and largest voting shareholder with a 24% stake. About a year ago, Cable & Wireless had struck a deal to buy Columbus International Inc., in which Mr. Malone owned a stake. The deal gave Mr. Malone a 13% voting stake in Cable & Wireless. As a result, Mr. Malone had recused himself from the talks between Liberty Global and Cable & Wireless.

Liberty Global has been on an acquisition spree over the past few years as it seeks to build an international media and cable powerhouse. A series of large acquisitions in recent years, including buying the U.K.'s Virgin Media Inc. and Dutch cable operator Ziggo NV, have made Liberty Global the largest cable operator in the world by subscribers, with 27 million customers across 14 countries.

Of late, Liberty Global has been snapping up stakes in content companies. In the past year, it has agreed to acquire Irish broadcaster TV3 and taken stakes in All3Media, British broadcaster ITV and Lions Gate Entertainment Corp.

Liberty Global is separate from Mr. Malone's Liberty Broadband Corp., which backs U.S.-based Charter Communications Inc., the company buying Time Warner Cable Inc. and Bright House Networks.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

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(END) Dow Jones Newswires

November 16, 2015 14:05 ET (19:05 GMT)

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