QVC net joins Liberty’s fraternity

Comcast becomes #2 stockholder in deal

Dealmaking maverick John Malone has pulled off another cash-free coup, agreeing to purchase Comcast’s 57% stake in home shopping net QVC for stock and a three-year note.

Liberty, which disclosed the terms of its previously announced $7.9 billion acquisition late Friday, will pay Comcast by issuing $2.6 billion in Liberty common stock plus $5.3 billion in a three-year interest-bearing note. Deal will make Comcast the second largest shareholder in Liberty after John Malone, with 7.5% of the Denver-based holding company.

Carrying cash

Liberty investors applauded the deal terms, which effectively mean Malone is buying the home shopping net for a figure closer to $7 billion today given the thee-year payment terms of the note. Moreover, the arrangement leaves plenty of cash in the arsenal with which to pursue Vivendi Universal Entertainment.

Analysts reckon Liberty has ready access to $10 billion in cash along with $700 million in Vivendi stock that could be exchanged in a deal. In addition, company could borrow up to $5 billion more off of currently debt-free QVC.

There is also the possibility that new minority shareholder Comcast could participate in or contribute assets toward Liberty’s bid.

Still interested in VUE?

The question is whether Malone is still as strategically motivated to pursue VUE now that he has QVC. Certainly this deal proves again Liberty’s preference for non-cash deals on good terms. With MGM evidently prepared to pay the highest premium, it’s unclear whether Malone & Co. are prepared to engage in a true bidding war.

On Friday ratings agency Standard & Poor’s said the transaction would have no effect on Liberty’s corporate credit rating, reaffirming its BBB- rating.

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