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Liberty Global’s Bermuda Relocation: Streamlining or Power Imbalance?

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Reports indicate that independent shareholders of Liberty Global are considering voting against a proposal to domicile the company in Bermuda during an upcoming extraordinary general meeting. Liberty Global, with telecoms business interests in multiple European markets, including Virgin Media O2 in the UK, initially filed a preliminary statement with the US Securities and Exchange Commission (SEC) in April for this move.

The company argues that reincorporating in Bermuda would simplify relations with its predominantly US-based shareholders. “Today, we are incorporated as an England and Wales company, listed on Nasdaq, and as a result, there are cumbersome administrative processes,” said Liberty Global CEO Mike Fries. He further explained that the move aims to align the US-style corporate law of Bermuda with the company’s listing on Nasdaq and the expectations of its largely US shareholder base.

Additionally, Fries highlighted that the shift should streamline various business activities, such as mergers and acquisitions. “Key components of our strategy to create shareholder value may include, among others, financing, cross-border M&A and investments, share buybacks, self-tender offers, spin-offs, and split-offs, all of which are easier to execute as a Bermuda company,” he noted in a message to shareholders.

However, not all shareholders are likely to support this move. The change would reportedly lower the threshold for significant shareholder votes from 75% to 50%, granting disproportionate voting power to Fries and Liberty Global’s chairman, billionaire John Malone. Together, they would control roughly 40% of votes, although they hold only 8% of the company’s shares.

This opposition arises amidst an already troublesome period for Liberty Global’s leadership due to proposed changes to executive pay packages and governance practices. To stay informed on the latest telecoms news, subscribe to Total Telecom’s daily newsletter. In other news, more than two-thirds of US commercial sites lack optical fiber access, Viasat has completed its Inmarsat merger deal, and EXATEL plans to expand into the subsea connectivity sector.

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