Why Virgin Media Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of British cable company Virgin Media (NASDAQ: VMED  ) soared 17% today on news that it is in talks with American billionaire John Malone's Liberty Global (NASDAQ: LBTYA  ) concerning a possible corporate transaction.

So what: Liberty Global has been expanding rapidly in Europe, and a deal with Virgin will allow it to apply those valuable growth lessons in the U.K., one of the continent's largest telecom markets. A tie-up would also put Malone head-to-head against his longtime rival Rupert Murdoch, whose News Corp. (NASDAQ: FOX  ) owns 39% of Britain's biggest satellite group, BSkyB.

Now what: I wouldn't buy into the buyout buzz just yet. While Virgin Media did issue a press release confirming the discussions, there's still plenty of doubt on Wall Street over Liberty's ability to finance the deal given its already-high debt load. When you couple that uncertainty with Virgin Media's red-hot stock performance over the past several months, staying on the sidelines seems prudent.

Interested in more info Virgin Media? Add it to your watchlist.

How about Liberty Global? Add it to your watchlist.


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