Malone U-Turns on Liberty Latin America | GLIBK
Why I think Malone was trying to buy more GCI, not exit LLA
Last Wednesday, GCI announced that it had acquired $107mm worth of Liberty Latin America (‘LLA’) shares and that it was in discussions to swap John Malone’s shares in LLA for newly issued shares in GCI. The stock dropped 20%.
On Monday, GCI U-turned. Malone is keeping his LLA shares, no exchange will happen, and he is personally buying GCI’s $107mm LLA position at cost. The stock recovered somewhat.
Most investors view this episode as Malone mistreating minority shareholders.
I have a different read: Malone was trying to buy more GCI, and LLA was the currency.
This article will explain:
The GCI/LLA deal and reversal
Why I think Malone was trying to buy more GCI, not exit LLA
What this means for GCI’s future acquisitions
GCI Liberty (GLIBK) spun out from Liberty Broadband in July 2025, has 90% market share in its key business, and trades for 10x underlying FCF. Investors ignored the spinoff, but John Malone did not. He is Chairman, owns 7.3% of GCI, and has been buying stock. He structured the spin to turn GCI into an advantaged acquirer and “the beginning of a new Liberty Media”. We see well over 100% upside in our Base case.
For more background, click here to read our 30 page report on GCI, based on interviews with 17 industry sources, and this article analyzing the recent acquisition of Quintillion.
GCI’s Purchase of LLA Shares
Last Wednesday, GCI announced that it had acquired 61,000 shares of Liberty Latin America (‘LLA’) class A shares and 12.3mm class C shares from Searchlight Capital Partners for $107mm, or $8.63/shr. That represents around 6% of LLA. Searchlight had been LLA’s largest shareholder.
I won’t go into detail as it is academic now, but LLA has been a disaster for shareholders for a decade with the stock down 65% since it was spun out in 2018. To summarize briefly:
The company levered up to acquire AT&T's Puerto Rico assets, then completely botched the integration and missed every target. A highly dilutive rights offering was required and the subsidiary now carries 8x ND/EBITDA and is in negotiations with creditors.
Chile was a parallel disaster. LLA’s subsidiary was overrun by fiber competition that management publicly downplayed for years as they kept investing capex, and ultimately rolled what was left into a JV that crystallized a near-total loss on one of the two anchor assets at the time of the spin.
Despite all this, management were not replaced but instead rewarded generously ($16.9m CEO comp in 2025 on a net loss against a ~$1.7bn equity market cap).
Additionally, GCI announced that it was in discussions to buy John Malone’s LLA shares, including the Class B 10x vote shares. Malone owned 14.5mm shares in LLA across various share classes, and at a rough ~$8 share price that would be another $116mm. GCI would own 13.3% of LLA shares and 27.3% of the votes if it bought all the Malone shares.
The acquisition of Malone’s shares would have been paid for via an exchange of newly issued class C shares in GCI to Malone. At the price shortly after the announcement of $27/shr that would be 4.3mm new shares and would more than double Malone’s ownership in GCI.
I, and many investors, did not like the LLA deal. The GCI acquisition strategy was supposed to be about using the company’s tax shields and acquisition capacity to buy non-traditional cable companies and build the next advantaged acquirer. The LLA deal at face value looked like Malone using GCI to buy himself out of a tricky asset.
The stock fell, and just three trading days later GCI U-turned:
GCI Liberty, Inc. (“GCI Liberty”) today announced that, following unexpected obstacles to completing a larger, more strategic transaction relating to Liberty Latin America Ltd. (“LLA”), Chairman of the Board, Dr. John C. Malone has determined to terminate discussions with GCI Liberty regarding any further acquisitions of his LLA interests and has offered to acquire GCI Liberty’s 6% equity interest in LLA at the same price paid by GCI Liberty last month. The Board of Directors has accepted this offer.
Dr. Malone states as follows: “My vision for GCI Liberty contemplates two distinct units — one built around stable, cash‑generative operations, with declining capital intensity and an ability to return capital from its rapidly growing free cash flow, and another focused on long‑term investment growth. While regulatory, tax, and structural complexities have complicated and delayed executing that framework fully, I continue to believe strongly in its merit. Given that I was unable to complete a larger transaction as originally contemplated, I have offered to purchase the LLA block at GCIL’s cost. This demonstrates both my support for LLA, but also my belief in the concept of GCIL becoming two business units under one umbrella.”
Most investors view this whole episode as Malone mistreating minority shareholders. While I have no doubt this was a mistake, I have a different view.
Was Malone Trying to Exit LLA, or Buy More GCI?
The consensus appears to be that Malone was using his control of GCI to move a problem position onto minority shareholders.
I think the opposite is true.
Look at how the deal was structured. GCI bought the Searchlight shares with