Virgin Media, O2 combine to create UK telecom Heavyweight

TELEFONICA SA and Liberty Global Plc have agreed to create the U.K.’s largest phone and internet operator, a deal that threatens its rivals and marks another merger for billionaire John Malone.

The deal values the new company at 31 billion pounds ($38 billion), with Telefonica’s O2 being valued at 12.7 billion pounds and Liberty’s Virgin Media valued at around 18.7 billion pounds. The companies, which started negotiations in December, said in a statement Thursday there are 6.2 billion pounds in synergies.