Virgin Media has accepted a $23.3bn (£15bn) takeover by American cable tycoon John Malone's Liberty Global in a deal that threatens to topple Rupert Murdoch's dominance of pay television by creating Europe's largest broadband business. The new company will have its headquarters in the UK, and serve 25m customers in 14 countries including Germany, Belgium, Switzerland and the Netherlands. Virgin will retain its brand, but chief executive Neil Berkett will step down when the merger concludes. Malone's timing, and the decision to relocate to London, may have been prompted by Virgin's announcement that it is to use £2.6bn of losses to reduce its corporation tax bill. The many regional cable businesses which came together over two decades into Virgin Media invested an estimated £13bn over two loss-making decades, and Virgin has calculated it could use a portion of those losses to avoid paying any corporation tax for a period. The cash and shares offer, announced as the London Stock Exchange opened on Wednesday, values Virgin at $47.87 per share, reflecting a 24% premium to the closing price on Monday before news of the deal emerged. Virgin investors will receive $17.50 in cash and own 36% of Liberty's shares once the deal is complete.
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