NTL confirms Virgin bid

5 Dec 2005

UK-based cable operator NTL has confirmed this morning it has moved to acquire Virgin Mobile as part of an £835m sterling bid that will create a quad-play technology media powerhouse combining digital television services with broadband, landline telephone services and mobile all on one bill.

It had been reported over the weekend that the cable giant had been in merger talks with Richard Branson’s Virgin Mobile.

In a statement this morning NTL UK said: “Further to recent press speculation, NTL Incorporated confirms that it has approached Virgin Mobile regarding a potential offer to combine NTL and Virgin Mobile.”

The statement said that under the potential offer, Virgin Mobile shareholders would be offered .09298 shares of NTL common stock per share of Virgin Mobile as well as a full cash alternative at 323p per share. The potential share offer values Virgin Mobile at 323p per share based on NTL’s closing price on 2 December 2005.

NTL said Virgin Group, which owns 72pc of Virgin Mobile, has given verbal assurances to NTL that, if a transaction proceeds, it intends to elect to exchange its stake in Virgin Mobile for a continuing equity participation in the NTL Group although it has reserved the right to take a small portion of its consideration in cash.

NTL added that it has held preliminary discussions with T-Mobile, Virgin Mobile’s network provider, which has also indicated that it is supportive of the proposed combination.

NTL already has a licence agreement with Virgin Enterprises for the exclusive use of the Virgin brand in the broadband area and is in discussions with Virgin Enterprises to extend that licence to cover television and fixed-line and mobile telephony. If the proposed combination with Virgin Mobile and the licence agreement are completed, NTL says it intends to use the Virgin brand to offer a quadruple play of internet, television and fixed-line and mobile telephony.

“These discussions are preliminary in nature and subject to the satisfaction of certain further conditions, including due diligence,” NTL said.

Separately, NTL said it is continuing with its proposed combination with Telewest Global, which was announced in October.

By John Kennedy