The cash and stock deal announced late Tuesday creates a company that will provide stiffer competition in the U.K. to satellite TV provider BSkyB, in which Malone's rival Rupert Murdoch's News Corp. owns a 40 percent stake.
Liberty Global has pay-TV operations around the world and is the largest cable operator in most of its 11 European markets.
Liberty Global's CEO Mike Fries said that after the deal, about 80 percent of the company's revenue will come from five countries: the U.K., Germany, Belgium, Switzerland and the Netherlands. The two companies said they had combined revenue of $16.8 billion last year.
Virgin Media is the second-biggest pay TV company in the U.K. after BSkyB, or British Sky Broadcasting Group PLC. Virgin Group boss Richard Branson — a multibillionaire, like Malone and Murdoch — still holds a minority stake.
The stock surged almost 18 percent Tuesday to close at $45.61 after the company said it was in acquisition talks with Liberty Global.
They added that they expect about $180 million in annual costs savings once they are fully combined. They didn't say whether any of their employees will be laid off as part of the cost cutting. More details about the companies' plan could emerge during a management conference call scheduled for 8:30 a.m. EST (1330 GMT0 Wednesday.