The Corporate Restructuring Report-Qurate Retail Group Inc. (QRTEA) & GCI Liberty Inc
On March 9th, 2018, Liberty Interactive Corporation (QVCA) completed the earlier announced acquisition of GCI Inc., and subsequent split-off of the combined entity (GCI Liberty Inc.) to shareholders of Liberty Ventures(LVNTA/LVNTB). Post the transaction, Liberty Interactive Corp is renamed Qurate Retail Group Inc. The split-off eliminates the tracking stock structure and creates two asset-backed stocks--Qurate Retail Group (QRTEA) and GCI Liberty Inc. (GLIBA). The transaction was announced on April 4th, 2017, and was tax-free.
GCI Liberty comprises GCI Inc. and interests in Charter Communications (CHTR), evite, LendingTree, and Liberty Broadband (LBRDK), while Qurae Retail comprises the following assets: HSN (100%), QVC (100%), Zulily (100%), Green Energy Investments, ILG (13%), FTD, private assets and exchangeable debentures.
We remain bullish on Qurate Retail Group prospects given US sales turnaround at QVC, EPS/cash flow benefits from the HSNi acquisition andGCI deal-related reattribution. The HSNi deal is expected to be accreitve with management sating a run rate of ~$200-$220 million in cost synergies by 2021. QVC business showed improving trends in the recent quarter, with US sales turnign positive and international business continuing solid momentum.
The combination with GCI substantially benefits Liberty Ventures structure by vonerting it into an asset-backed company. This allows more leveraging against ownership stakes in LBRDK and CHTR, thereby providing more room for aggressive share repurchases and possible M&A.
Ofthe two, we preferQurate Retail Group owing to its higher growth prospects. In our view, both QRTEA and GLIBA are undervalued.
GCI Liberty is a holding company. Through its GCI Holdings, LLC (GCI Holdings) subsidiary, the company owns and operates a statewide network providing voice and data services to the urban and rural communities of Alaska. The company provides a range of wireless, data, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska under its GCI brand. GCI Holdings serves rural and remote Alaska locations solely via satellite communications. Its statewide wireless network provides 4G LTE data service, EVDO, 3G UMTS/HSPA+, 2G CDMA, and 2G GSM/EDGE service.
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