Liberty Global Selling Stake In Japanese Subsidiary

Cable company Liberty Global Inc. (Nasdaq: LBTYA) (Nasdaq: LBTYB) (Nasdaq: LBTYK) made an announcement early Monday that Japanese wireless operator KDDI Corp. has agreed to buy its subsidiaries that directly and indirectly control 37.8% of Japanese broadband communications unit, Jupiter Telecommunications Co. Ltd., for $4 billion in cash, which includes an anticipated dividend of 490 per share.

The price values values Liberty Global's 2.6 million Jupiter Telecommunications shares at about 140,000 yen per Jupiter share and is about 65% higher than Jupiter's Friday closing share price.

"The deal will help KDDI reach more customers somewhere in the neighborhood of 3-plus million," said Brett McGonegal, a managing director at Cantor Fitzgerald. "KDDI is also trying to diversify away from NTT [DoCoMo] (NYSE: DCM) on the fiber side. This deal will most definitely accomplish that, the real question here is at what price?"

"On first blush the valuation seems high and the stock will come under pressure," McGonegal said. "As people dig deeper and understand the synergies, the stock should find its footing and venture higher."

Before the announcement, KDDI's stock closed down 2% in Tokyo.