Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2019

Acquisitions and Dispositions [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

Acquisition

De Vijver Media. Prior to June 3, 2019, Telenet owned a 50.0% equity method investment in De Vijver Media NV (De Vijver Media), which provides content production, broadcasting and advertising services in Belgium. On June 3, 2019, Telenet acquired the remaining 50.0% ownership interest in De Vijver Media (the De Vijver Media Acquisition) for cash consideration of €52.5 million ($58.9 million at the transaction date) after post-closing adjustments. Immediately following this transaction, Telenet repaid in full De Vijver Media’s €62.0 million ($69.5 million at the transaction date) of outstanding third-party debt. In connection with the De Vijver Media Acquisition, we recognized a $25.7 million gain during the second quarter of 2019, representing the difference between the fair value of $57.9 million and carrying amount of our then-existing 50.0% ownership interest in De Vijver Media. This gain is included in other income, net, in our condensed consolidated statements of operations.

Dispositions

Vodafone Disposal Group. On July 31, 2019, we completed the sale of our operations in Germany, Romania, Hungary and the Czech Republic to Vodafone. The operations of Germany, Romania, Hungary and the Czech Republic are collectively referred to herein as the “Vodafone Disposal Group.” After considering debt and working capital adjustments (including cash disposed) and €183.7 million ($205.8 million at the transaction date) of cash paid by our company to settle centrally-held vendor financing obligations associated with the Vodafone Disposal Group, we received net cash proceeds of €10.0 billion ($11.1 billion at the applicable rates). In August 2019, we used a portion of the net proceeds from the sale of the Vodafone Disposal Group to prepay in full the $1,645.0 million outstanding principal amount on a U.S. dollar-denominated term loan facility under the UPC Holding Bank Facility. Pursuant to the agreement underlying the sale of the Vodafone Disposal Group, we transferred cash to fund certain third-party escrow accounts (the Vodafone Escrow Accounts) pending the fulfillment by our company of certain terms of the agreement. The receivables associated with the Vodafone Escrow Accounts are included in “other current assets” and “other assets, net” on our condensed consolidated balance sheet. As of September 30, 2019, the aggregate balance of the Vodafone Escrow Accounts was $306.5 million.

In connection with the sale of the Vodafone Disposal Group, we recognized a gain of $12.2 billion that includes cumulative foreign currency translation gains of $88.2 million and income taxes of $11.7 million.

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. During the three months ended September 30, 2019, we recorded revenue of $25.5 million associated with these transitional services.

UPC DTH. On May 2, 2019, we completed the sale of UPC DTH to M7 Group (M7). After considering debt and working capital adjustments (including cash disposed), we received net cash proceeds of €130.5 million ($145.8 million at the applicable dates). The proceeds from the sale of UPC DTH were used for general corporate purposes.

In connection with the sale of UPC DTH, we recognized a gain of $106.6 million that includes cumulative foreign currency translation losses of $10.0 million. No income taxes were required to be provided on this gain.

In connection with the sale of UPC DTH, we have agreed to provide certain transitional services to M7 for a period of up to two 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. During the nine months ended September 30, 2019, we recorded revenue of $0.9 million associated with these transitional services.

UPC Austria. On July 31, 2018, we completed the sale of our Austrian operations, “UPC Austria,” to Deutsche Telekom AG (Deutsche Telekom). In connection with the sale of UPC Austria, we have agreed to provide certain transitional services to Deutsche Telekom for a period of up to four years. These services principally comprise network and information technology-related functions. During the nine months ended September 30, 2019, we recorded revenue of $34.3 million associated with these transitional services.

Presentation of Discontinued Operations

The operations of the Vodafone Disposal Group, UPC Austria and UPC DTH are presented as discontinued operations in our condensed consolidated financial statements for all applicable periods. In connection with the signing of each respective sale agreement, we ceased to depreciate or amortize the long-lived assets of (i) UPC Austria on December 22, 2017, (ii) the Vodafone Disposal Group on May 9, 2018 and (iii) UPC DTH on December 21, 2018. Our operations in Austria, Romania, Hungary and the Czech Republic as well as the operations of UPC DTH were held through UPC Holding prior to their respective disposal dates. No debt, interest expense or derivative instruments of the UPC Holding borrowing group, other than with respect to certain borrowings that are direct obligations of the entities that were disposed, has been allocated to discontinued operations. Conversely, all of Unitymedia’s debt, interest expense and derivative instruments has been included in discontinued operations as its debt and derivative instruments are direct obligations of entities within the Vodafone Disposal Group. A portion of the proceeds from the disposition of UPC Austria was used to reduce the outstanding debt of the UPC Holding borrowing group.

The carrying amounts of the major classes of assets and liabilities of the Vodafone Disposal Group and UPC DTH as of December 31, 2018 are summarized below. These amounts exclude intercompany assets and liabilities that are eliminated within our condensed consolidated balance sheet.

	Vodafone Disposal Group		UPC DTH		Total
	in millions
Assets:
Current assets other than cash	$	348.0	$	8.5	$	356.5
Property and equipment, net	5,591.4		79.7		5,671.1
Goodwill	3,986.7		—		3,986.7
Other assets, net	509.4		7.4		516.8
Total assets	$	10,435.5	$	95.6	$	10,531.1
Liabilities:
Current portion of debt and finance lease obligations	$	809.0	$	11.2	$	820.2
Other accrued and current liabilities	1,114.8		32.5		1,147.3
Long-term debt and finance lease obligations	9,037.1		37.5		9,074.6
Other long-term liabilities	997.5		0.3		997.8
Total liabilities	$	11,958.4	$	81.5	$	12,039.9

The operating results of UPC Austria, the Vodafone Disposal Group and UPC DTH for the periods indicated are summarized in the following tables. These amounts exclude intercompany revenue and expenses that are eliminated within our condensed consolidated statement of operations.

	Vodafone Disposal Group (a)
	in millions
Three months ended September 30, 2019
Revenue	$	290.3
Operating income	$	156.1
Earnings before income taxes	$	127.4
Income tax expense	(35.2		)
Net earnings attributable to Liberty Global shareholders	$	92.2

_______________

(a) Includes the operating results of the Vodafone Disposal Group from July 1, 2019 through July 31, 2019, the date the Vodafone Disposal Group was sold.

	Vodafone Disposal Group (a)			UPC DTH (b)		Total
	in millions
Nine months ended September 30, 2019
Revenue	$	2,017.9		$	36.7	$	2,054.6
Operating income	$	1,165.6		$	10.7	$	1,176.3
Earnings before income taxes	$	994.7		$	9.5	$	1,004.2
Income tax expense	(273.9		)	—		(273.9		)
Net earnings attributable to Liberty Global shareholders	$	720.8		$	9.5	$	730.3

_______________

(a) Includes the operating results of the Vodafone Disposal Group from January 1, 2019 through July 31, 2019, the date the Vodafone Disposal Group was sold.

(b) Includes the operating results of UPC DTH from January 1, 2019 through May 2, 2019, the date UPC DTH was sold.

	UPC Austria			Vodafone Disposal Group			UPC DTH		Total
	in millions
Three months ended September 30, 2018
Revenue	$	35.7		$	872.4		$	28.3	$	936.4
Operating income	$	16.1		$	532.3		$	3.4	$	551.8
Earnings before income taxes	$	16.0		$	427.5		$	2.7	$	446.2
Income tax expense	(4.1		)	(114.9		)	—		(119.0		)
Net earnings	11.9			312.6			2.7		327.2
Net earnings attributable to noncontrolling interests	(0.6		)	—			—		(0.6		)
Net earnings attributable to Liberty Global shareholders	$	11.3		$	312.6		$	2.7	$	326.6

	UPC Austria			Vodafone Disposal Group			UPC DTH		Total
	in millions
Nine months ended September 30, 2018
Revenue	$	252.4		$	2,717.6		$	88.8	$	3,058.8
Operating income	$	139.0		$	1,263.8		$	6.0	$	1,408.8
Earnings before income taxes	$	138.7		$	919.0		$	4.6	$	1,062.3
Income tax expense	(23.3		)	(241.7		)	—		(265.0		)
Net earnings	115.4			677.3			4.6		797.3
Net earnings attributable to noncontrolling interests	(4.2		)	—			—		(4.2		)
Net earnings attributable to Liberty Global shareholders	$	111.2		$	677.3		$	4.6	$	793.1

Our basic and diluted earnings from discontinued operations attributable to Liberty Global shareholders per share for the three and nine months ended September 30, 2019 and 2018 is presented below. For information regarding our basic and diluted weighted average ordinary shares outstanding, see note 15.

	Three months ended				Nine months ended
	September 30,				September 30,
	2019		2018		2019		2018
Basic and diluted earnings from discontinued operations attributable to Liberty Global shareholders per share	$	0.13	$	0.41	$	1.00	$	1.01

Other

UPC Switzerland. On February 27, 2019, we entered into a share purchase agreement (the Sunrise SPA) to sell our operations in Switzerland (UPC Switzerland) to Sunrise Communications Group AG (Sunrise). Closing of the transaction is subject to approval by Sunrise’s shareholders with respect to an associated capital increase. On October 22, 2019, the Sunrise SPA was amended, pursuant to which we consented to the cancellation of the Extraordinary General Meeting (EGM) that was scheduled to take place on October 23, 2019 to approve the capital increase. The amended Sunrise SPA provides that Sunrise is obligated to convene a new EGM at our written request. The Sunrise SPA also includes certain termination provisions, which remain in effect. In addition, the amended Sunrise SPA (i) provides our company the right to terminate the Sunrise SPA at any time, except if we have requested Sunrise to convene a new EGM, and (ii) entitles Sunrise to terminate the Sunrise SPA at any time after November 11, 2019, except if we have requested Sunrise to convene a new EGM. The Sunrise SPA obligates Sunrise to pay our company a termination fee of CHF 50.0 million ($50.1 million) upon termination of the Sunrise SPA for certain events. Under the amended Sunrise SPA, these events are preserved, and it is agreed that this termination fee is payable by Sunrise if our company or Sunrise exercise the aforementioned additional termination rights.