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(Sharecast News) - Vodafone said on Wednesday that Liberty Global has agreed to buy out its 50% interest in their Dutch joint venture VodafoneZiggo for 1bn in cash and a 10% shareholding in a soon-to-be-formed Benelux entity.
The entity will own 100% of both VodafoneZiggo and Liberty Global's Belgian subsidiary, Telenet.
Liberty Global plans to spin off its 90% stake in Ziggo Group to existing shareholders and list the business on Euronext in Amsterdam in 2027.
Vodafone said it has the option to sell its 10% shareholding in Ziggo Group to a third party should a spin not occur within 18 months after completion.
Vodafone and Liberty Global have also agreed that Vodafone will continue to provide certain services, including brand licensing, to VodafoneZiggo, with expected charges of 625m over the next 10 years.
Vodafone chief executive Margherita Della Valle said: "We're pleased to have agreed the sale of our 50% share in VodafoneZiggo at an attractive valuation.
"This transaction delivers 1 billion in cash to Vodafone, and we have the potential for further value creation through our 10% stake in Ziggo Group, a business with greater scale."
Liberty Global said the deal creates "a regional telecommunications powerhouse in Benelux, with significant free-cash-flow potential underpinning a compelling equity story".
Chairman and chief executive Mike Fries said: "This transaction marks a significant milestone in our decades-long commitment to the Benelux region and is fully aligned with our strategy of unlocking long-term value for shareholders.
"By combining these assets, we are creating a regional powerhouse comprised of two converged national FMC champions operating in rational markets - an attractive platform with strong prospects for sustained free-cash-flow generation. We are excited about giving shareholders the opportunity to participate directly in Ziggo Group's future growth and value creation."
The deal is expected to complete in the second half of this year.
At 1340 GMT, Vodafone shares were up 4% at 120.28p.
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