US billionaire John Malone's cable group, Liberty Global, has agreed to buy the UK's Virgin Media in a cash and stock deal worth $23.3bn (£15bn).
The deal will create the world's largest broadband company, with 25 million customers in 14 countries.
In the UK, it will be the second biggest pay-TV business after BSkyB.
The merger, subject to shareholder and regulatory approval, puts Mr Malone in competition with Rupert Murdoch, whose media empire owns 39% of BSkyB.
Following the deal, about 80% of Liberty Global's revenue will come from five European countries: the UK, Germany, Belgium, Switzerland and the Netherlands.
"Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we've been successfully using for over seven years," said Mike Fries, chief executive of Liberty Global.
Under the terms of the agreement, Virgin Media shareholders will receive $17.50 in cash, 0.2582 Liberty Global Series A shares and 0.1928 Liberty Global Series C shares for each Virgin Media share that they hold.
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This implies a price of $47.87 per Virgin Media share - a 24% premium to Virgin Media's closing price on 4 February - and gives the company an equity value of about $16bn.
Alongside the announcement of the deal, Virgin Media reported a 30% rise in operating profit to £699.1m last year.
It said it added a record 88,700 new customers to its cable business during the year.
Shares jump- Revenues of $10bn, 90% coming from Europe
- Nearly $1bn of revenues from Chile
- Operates in 13 countries
- Over 34 million video, voice and internet subscriptions
- Consumer brands include UPC, Unitymedia, Kabel BW, Telenet and VTR
- 19.6 million customers
- 21,000 employees worldwide
- Market capitalisation of nearly $18bn
- Debt of nearly $30bn
Figures correct as at September 2012
Neil Berkett, chief executive of Virgin Media, said: "The combined company will be able to grow faster and deliver enhanced returns by capitalising on the exciting opportunities that the digital revolution presents, both in the UK and across Europe."
Virgin Media was created from the merger of NTL and Telewest, and Sir Richard Branson's Virgin Mobile in 2006.
As part of that deal Sir Richard retained a 3% stake in the company, which has a 30-year brand licensing agreement with his Virgin Group.
Mr Malone, who is the chairman of Liberty Global, clashed with News Corp's Mr Murdoch in 2007 when the two companies vied for control of DirecTV Group, the largest US satellite TV broadcaster.
BSkyB leads the UK pay-TV market with 10.7 million customers compared with Virgin Media's 4.9 million.
Virgin Media's main listing is in the US on the Nasdaq technology stock exchange, where its shares jumped 17.9% on Tuesday amid speculation that a deal was imminent.
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