v3.10.0.1
Acquisitions and Dispositions
 6 Months Ended
Jun. 30, 2018
Acquisitions and Dispositions [Abstract]  
Acquisitions and Dispositions Acquisitions and Dispositions

2017 Acquisition

On June 19, 2017, Telenet acquired Coditel Brabant sprl, operating under the SFR brand (SFR BeLux), for a cash and debt free purchase price of €369.0 million ($410.3 million at the applicable rates) (the SFR BeLux Acquisition) after post-closing adjustments. SFR BeLux provides cable and mobile services to households and businesses in Belgium and Luxembourg.

Pending and Completed Dispositions

Vodafone Disposal Group

On May 9, 2018, we reached an agreement (the Vodafone Agreement) to sell our operations in Germany, Romania, Hungary and the Czech Republic to Vodafone Group plc (Vodafone). The cash proceeds that we receive from the transaction will be calculated on the basis of the agreed enterprise value adjusted for the net debt and working capital of such businesses as of the closing date of the transaction, as well as other post-closing adjustments. Based on the net debt and working capital of such
businesses as of December 31, 2017, the cash proceeds would be approximately €10.6 billion ($12.4 billion). The operations of Germany, Romania, Hungary and the Czech Republic are collectively referred to herein as the “Vodafone Disposal Group.”

Closing of the transaction is subject to various conditions, including regulatory approval, which is not expected until mid-2019. The Vodafone Agreement contains certain termination rights for both our company and Vodafone, including if closing has not occurred by November 9, 2019, or May 9, 2020 in certain limited circumstances. If the Vodafone Agreement terminates because the condition to obtain antitrust approval is not met, Vodafone has agreed to pay us a compensatory payment of €250.0 million ($291.9 million). Pursuant to the Vodafone Agreement, our company will retain all cash generated from the Vodafone Disposal Group through the closing of the transaction.

In connection with the sale of the Vodafone Disposal Group, we have agreed to provide certain transitional services for a period of up to four years. These services principally comprise network and information technology-related functions. The annual charges will depend on the actual level of services required by Vodafone.

UPC Austria

On July 31, 2018, we completed the sale of our Austrian operations, “UPC Austria,” to a third party for an enterprise value of €1.9 billion ($2.2 billion at the transaction date). After considering debt, working capital and minority interest adjustments, we received net cash proceeds of €1.8 billion ($2.1 billion at the transaction date). A portion of the net proceeds were used to repay or redeem an aggregate $1.5 billion (equivalent based on the applicable June 30, 2018 exchange rates) principal amount of our outstanding debt, including (i) the repayment of $913.8 million (equivalent) principal amount under the UPC Holding Bank Facility, (ii) the redemption of $70.1 million (equivalent) principal amount of the UPCB SPE Notes and (iii) the redemption of $519.9 million (equivalent) principal amount of the VM Notes. The remaining net proceeds from the sale of UPC Austria are expected to be used for general corporate purposes, including an additional $500.0 million of share repurchases, as further described in note 11.

In connection with the sale of UPC Austria, we have agreed to provide certain transitional services for a period of up to four years. These services principally comprise network and information technology-related functions. The annual charges will depend on the actual level of services required by the purchaser. Liberty Global will also allow the use of the UPC brand for a transitional period of up to three years as part of the transaction.

Split-off Transaction

Prior to December 29, 2017, our share capital included (i) Liberty Global Class A, Class B and Class C ordinary shares (collectively, Liberty Global Shares) and (ii) LiLAC Class A, Class B and Class C (collectively, LiLAC Shares). On December 29, 2017, in order to effect the split-off of the LiLAC Group (the Split-off Transaction), we distributed 100% of the common shares (the Distribution) of Liberty Latin America Ltd. (Liberty Latin America) to the holders of our then outstanding LiLAC Shares. Just prior to the completion of the Split-off Transaction, all of the businesses, assets and liabilities of the LiLAC Group were transferred to Liberty Latin America, which was then a wholly-owned subsidiary of Liberty Global. Following the Distribution, the LiLAC Shares were redesignated as deferred shares (which had virtually no economic rights) and Liberty Latin America became an independent publicly-traded company that is no longer consolidated by Liberty Global. No gain or loss was recognized in connection with the Split-off Transaction.

In connection with the Split-off Transaction, we entered into several agreements that govern certain transactions and other matters between our company and Liberty Latin America (the Split-off Agreements). During the six months ended June 30, 2018, the impacts of the Split-off Agreements and other normal recurring transactions between our company and Liberty Latin America were not material.

Presentation of Discontinued Operations

Effective with the signing of the Vodafone Agreement, we began presenting the Vodafone Disposal Group as discontinued operations and, accordingly, we no longer depreciate or amortize the long-lived assets of such group. From December 22, 2017, the date we reached an agreement to sell UPC Austria, through the signing of the Vodafone Agreement, we accounted for UPC Austria as held for sale but did not present such entity as a discontinued operation as this disposal was not considered to be a
strategic shift that would have a major effect on our operations and financial results. We ceased to depreciate or amortize the long-lived assets of UPC Austria on December 22, 2017. Effective with the signing of the Vodafone Agreement and in consideration of the additional disposals contemplated therein, we began presenting UPC Austria as a discontinued operation. Accordingly, UPC Austria and the Vodafone Disposal Group are presented as discontinued operations in our condensed consolidated balance sheets, statements of operations and cash flows for all periods presented. Our operations in Romania, Hungary and the Czech Republic are held through UPC Holding, as was UPC Austria prior to its sale on July 31, 2018. No debt, interest or derivative instruments of the UPC Holding borrowing group, other than amounts that are direct obligations of the entities to be disposed, has been allocated to discontinued operations. Conversely, all of Unitymedia’s debt, interest and derivative instruments are included in discontinued operations as they are direct obligations of entities within the Vodafone Disposal Group. As discussed above, a portion of the proceeds from the disposition of UPC Austria was used to pay down the debt of the UPC Holding borrowing group. In addition, we expect that a portion of the proceeds from the disposition of the Vodafone Disposal Group will be used to pay down the debt of the UPC Holding borrowing group.

In addition, the entities comprising the LiLAC Group are reflected as discontinued operations in our condensed consolidated statements of operations and cash flows for the three and six months ended June 30, 2017.

The carrying amounts of the major classes of assets and liabilities of UPC Austria and the Vodafone Disposal Group as of June 30, 2018 are summarized below:
 
UPC Austria
 
Vodafone Disposal Group
 
Total
 
in millions
Assets:
 
 
 
 
 
Current assets other than cash
$
40.9

 
$
384.3

 
$
425.2

Property and equipment, net
479.6

 
5,245.8

 
5,725.4

Goodwill
706.0

 
4,041.0

 
4,747.0

Other assets, net
3.2

 
458.2

 
461.4

Total assets
$
1,229.7

 
$
10,129.3

 
$
11,359.0

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
Current portion of debt and capital lease obligations
$
0.8

 
$
602.3

 
$
603.1

Other accrued and current liabilities
82.8

 
1,187.2

 
1,270.0

Long-term debt and capital lease obligations
1.3

 
9,155.7

 
9,157.0

Other long-term liabilities
85.1

 
883.3

 
968.4

Total liabilities
$
170.0

 
$
11,828.5

 
$
11,998.5


The carrying amounts of the major classes of assets and liabilities of UPC Austria and the Vodafone Disposal Group as of December 31, 2017 are summarized below:
 
UPC Austria
 
Vodafone Disposal Group
 
Total
 
in millions
Assets:
 
 
 
 
 
Current assets other than cash
$
29.2

 
$
238.9

 
$
268.1

Property and equipment, net
451.9

 
5,290.1

 
5,742.0

Goodwill
732.2

 
4,181.0

 
4,913.2

Other assets, net
3.2

 
482.7

 
485.9

Total assets
$
1,216.5

 
$
10,192.7

 
$
11,409.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
Current portion of debt and capital lease obligations
$
0.8

 
$
486.9

 
$
487.7

Other accrued and current liabilities
77.7

 
1,022.3

 
1,100.0

Long-term debt and capital lease obligations
1.5

 
9,026.1

 
9,027.6

Other long-term liabilities
76.3

 
863.7

 
940.0

Total liabilities
$
156.3

 
$
11,399.0

 
$
11,555.3


The operating results of UPC Austria, the Vodafone Disposal Group and the LiLAC Group for the three and six months ended June 30, 2018 and 2017 are summarized in the following tables. These amounts exclude intercompany revenue and expenses that are eliminated within our condensed consolidated statement of operations.
 
UPC Austria
 
Vodafone Disposal Group
 
Total
 
in millions
Three months ended June 30, 2018
 
 
 
 
 
Revenue
$
107.4

 
$
892.9

 
$
1,000.3

Operating income
$
61.7

 
$
419.9

 
$
481.6

 
 
 
 
 
 
Earnings before income taxes and noncontrolling interests
$
61.5

 
$
310.1

 
$
371.6

Income tax expense
(9.7
)
 
(80.1
)
 
(89.8
)
Net earnings
51.8

 
230.0

 
281.8

Net earnings attributable to noncontrolling interests
(1.8
)
 
—

 
(1.8
)
Net earnings attributable to Liberty Global shareholders
$
50.0

 
$
230.0

 
$
280.0


 
UPC Austria
 
Vodafone Disposal Group
 
Total
 
in millions
Six months ended June 30, 2018
 
 
 
 
 
Revenue
$
216.7

 
$
1,845.2

 
$
2,061.9

Operating income
$
122.9

 
$
731.5

 
$
854.4

 
 
 
 
 
 
Earnings before income taxes and noncontrolling interests
$
122.7

 
$
491.5

 
$
614.2

Income tax expense
(19.2
)
 
(126.8
)
 
(146.0
)
Net earnings
103.5

 
364.7

 
468.2

Net earnings attributable to noncontrolling interests
(3.6
)
 
—

 
(3.6
)
Net earnings attributable to Liberty Global shareholders
$
99.9

 
$
364.7

 
$
464.6


 
UPC Austria
 
Vodafone Disposal Group
 
LiLAC Group
 
Total
 
in millions
Three months ended June 30, 2017
 
 
 
 
 
 
 
Revenue
$
95.9

 
$
792.9

 
$
920.9

 
$
1,809.7

Operating income
$
35.6

 
$
234.5

 
$
155.4

 
$
425.5

 
 
 
 
 
 
 
 
Earnings before income taxes and noncontrolling
interests
$
35.6

 
$
125.9

 
$
8.4

 
$
169.9

Income tax expense
(3.0
)
 
(27.4
)
 
(30.6
)
 
(61.0
)
Net earnings (loss)
32.6

 
98.5

 
(22.2
)
 
108.9

Net earnings attributable to noncontrolling
interests
(1.6
)
 
—

 
(15.5
)
 
(17.1
)
Net earnings (loss) attributable to Liberty Global shareholders
$
31.0

 
$
98.5

 
$
(37.7
)
 
$
91.8

 
UPC Austria
 
Vodafone Disposal Group
 
LiLAC Group
 
Total
 
in millions
Six months ended June 30 2017
 
 
 
 
 
 
 
Revenue
$
188.1

 
$
1,549.9

 
$
1,831.8

 
$
3,569.8

Operating income
$
70.1

 
$
410.0

 
$
290.2

 
$
770.3

 
 
 
 
 
 
 
 
Earnings before income taxes and noncontrolling interests
$
70.1

 
$
221.1

 
$
42.1

 
$
333.3

Income tax expense
(5.8
)
 
(45.1
)
 
(75.2
)
 
(126.1
)
Net earnings (loss)
64.3

 
176.0

 
(33.1
)
 
207.2

Net earnings attributable to noncontrolling
interests
(3.2
)
 
—

 
(31.9
)
 
(35.1
)
Net earnings (loss) attributable to Liberty Global shareholders
$
61.1

 
$
176.0

 
$
(65.0
)
 
$
172.1


Our basic and diluted earnings from discontinued operations attributable to Liberty Global shareholders per Liberty Global Share for the three and six months ended June 30, 2018 and 2017 is presented below. These amounts relate to the operations of UPC Austria and the Vodafone Disposal Group. For information regarding the calculation of our weighted average shares outstanding with respect to Liberty Global Shares, see note 14.
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Basic earnings from discontinued operations attributable to Liberty Global shareholders per Liberty Global Share
$
0.35

 
$
0.15

 
$
0.58

 
$
0.27

 
 
 
 
 
 
 
 
Diluted earnings from discontinued operations attributable to Liberty Global shareholders per Liberty Global Share
$
0.35

 
$
0.15

 
$
0.58

 
$
0.27


Our basic and diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC Share for the three and six months ended June 30, 2017 is presented below. These amounts relate to the operations of the LiLAC Group.
 
Three months ended
June 30, 2017
 
Six months ended
June 30, 2017
 
 
 
 
Basic and diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC Share
$
(0.22
)
 
$
(0.38
)
 
 
 
 
Weighted average ordinary shares outstanding (LiLAC Shares) - basic and diluted
172,074,934

 
172,410,613



Other

Multimedia. On October 18, 2016, our subsidiary UPC Polska SP Z.o.o. (UPC Poland) entered into a definitive agreement to acquire the cable business of Multimedia Polska S.A. (Multimedia), the third-largest cable operator in Poland. On October 18, 2017, the Polish regulator issued a statement of objection against the proposed transaction on the basis that such transaction could restrict competition in a number of cities across the country. On March 23, 2018, UPC Poland withdrew its application for regulatory clearance to acquire Multimedia after failing to agree to revised commercial terms with the sellers that take into account current regulatory and market conditions. In addition, the agreement to acquire Multimedia has been terminated.