Richard Branson, the kite-surfing entrepreneur who built a fortune starting from a London record store, stands to reap $316 million from the buyout of U.K. cable operator Virgin Media Inc. (VMED) by John Malone’s Liberty Global Inc. (LBTYA:US)
Branson, who is worth more than $5 billion based on the Bloomberg Billionaires Index, owns 6.6 million Virgin Media shares through RBC Trusts and Virgin Entertainment Investment Holdings, according to data compiled by Bloomberg. Liberty Global (LBTYA) agreed today to buy the company for $16 billion, paying a 24 percent premium to Virgin Media’s closing price on Feb. 4.
For Branson, 62, the $47.87 price represents an extra $61 million in two days. His Virgin Group Ltd. (1044Q) empire ranges from airlines to mobile phones to financial services. Virgin Media was created in 2006 when he merged his Virgin Mobile U.K. into NTL: Telewest to offer pay-TV, broadband, fixed-line and mobile-phone services. Branson started Virgin Mobile in 1999.
The London-born billionaire began building a music empire as a young man by selling records at prices that undercut chain-store competitors. He started Virgin Records in the early 1970s. The label handled punk bands including the Sex Pistols and brought reggae music to a wider audience.
Branson later founded Virgin Atlantic Airways and other airlines, as well as Virgin Mobile and a U.K. rail company. He also joined the privately funded space race, and his Virgin Galactic is now taking bookings for $200,000 “Pioneer Astronaut” sub-orbital flights. He’s known for poking fun at the stodginess of British Airways and for funding and participating in humanitarian efforts, particularly in Africa.
Branson, a sports fanatic who has maintained a long-haired blond surfer-dude look into his 60s, lives at times on Necker Island, a Caribbean outpost he owns. When working, he often keeps a pair of scissors in his pocket to cut people’s ties off.
Through a spokesman, Branson declined to comment on the Virgin Media sale. The company is run by Chief Executive Officer Neil Berkett, who joined the company from NTL and will step down after the Liberty Global deal closes. Berkett, who joined the company from NTL, said today on a conference call that he’s “not a very good No. 2.”
Shares of Virgin Media (VMED), which is based in New York and operates in the U.K., dipped 1.6 percent to $44.89 at the close in New York. They advanced 18 percent yesterday after the company said it was considering a transaction and have risen 22 percent this year.
Liberty Global, based in Englewood, Colorado, fell 2.7 percent to $66.06 at the close in New York. The Class A shares have added 4.9 percent this year.
Under the agreement announced today, Liberty Global will pay $17.50 cash, plus 0.2582 share of its Series A stock and 0.1928 share of its Series C stock for each Virgin Media share. Cable billionaire John Malone, Liberty Global’s chairman, controls 36 percent of the voting power through his ownership of Series B stock.
Liberty Global will also assume debt that brings the total value of the transaction to $23.3 billion, according to a statement from the companies today.
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