NTL may hike offer for Virgin Mobile |
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Published
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Fri, 13 Jan 2006 13:50
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LONDON: Cable operator NTL Inc. is likely to make an improved offer for Virgin Mobile Plc. as the negotiations had got stalled over the price. According to newspaper reports, the company will make an offer of between 365 pence and 370 pence a share with a view to get the Virgin board's backing.
The new proposal envisages majority shareholder Richard Branson opting for a share swap for his 72 per cent holding in the company so that smaller investors in the firm could get a better price for their holding. NTL had originally made an offer of 817 million pounds for the business, giving a value of 323 pence for a share. Virgin Mobile shares were trading Thursday at 368 pence each, valuing the company at 951 million pounds.
Virgin Mobile's board had rejected the deal in December last saying it undervalued the business. Some sources said the minority shareholders were expecting an offer of 400 pence a share.
According to sources involved in the negotiations, Branson, if his proposal for the share swap is accepted, will end up as the largest stakeholder in the merged entity with 14 per cent.
NTL, which has already concluded a deal to buy rival Telewest, had reportedly suggested a licensing deal with Branson's Virgin group in order to brand the unified NTL/Telewest services under the Virgin name.
Virgin Mobile has two institutional investors, Morley Fund Management and Fidelity, both having some 7 per cent holding each in the company. A successful deal will depend on these shareholders' attitude.
If the merger indeed happens, the combined business will have 10 million customers and will directly take on Rupert Murdoch's BSkyB, offering fixed-line and mobile telephony as well as broadband access and television services in one go.
Virgin is represented in the talks by Morgan Stanley, while NTL has Goldman Sachs as advisers.
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Virgin Mobile rejects NTL's offer, Branson is hopeful of a deal 