LONDON: Cable operator NTL Inc.'s take over offer of Virgin Mobile is expected to progress with Sir Richard Branson proposing a 930- million-pound deal, and Virgin Mobile's board becoming responsive to the offer, according to reports.
NTL has formally put forth an increased offer Friday, which is 372-pence-a- share to Virgin Mobile's minority shareholders. Sir Richard would accept less than this price for his 72 per cent stake to bridge the difference in price between the two sides.
The Virgin Mobile board had met Friday night and is expected to issue a statement accepting the offer and agreeing to open its books for NTL to do a due diligence.
According to reports, while NTL has made its latest offer at 360 pence-a-share, Sir Richard agreed to make up the difference by accepting cash for part of his 72 per cent stake (between 10 and 20 per cent) and the rest in shares and using the cash to pay the extra 12-pence-a-share to the minority shareholders. This will mean that his proposed holding in the merged entity will be down to about 12.5 per cent compared with the original plan of 14 per cent. He will still be the largest shareholder in the company, which will use the Virgin brand in offering its "quadruple play" of TV, broadband internet access, home telephone and mobile phone services products, the first company to do so.
NTL, which has already acquired broadband internet service provider EasyNext, originally made a 323-pence-a-share offer in December, which was rejected by the Virgin Mobile board, describing it as too low. Sir Richard had supported the deal even at that time.
Virgin Mobile's two minority shareholders -- Fidelity and Morley Fund Management -- each holding about 7 per cent of the stocks, had been resisting the NTL offer. In the changed circumstances, sources said, they are expected to accept it.
At 360 pence, Virgin Mobile is valued at 930 million pounds. Its shares closed at 371 pounds on Friday night and lower than the price being offered to the minority shareholders.
The merged company will be a serious competitor to Rupert Murdoch's BSkyB and to a certain extent telecom company BT Group, which is planning to enter the home entertainment sector in Britain. It will boast of a 10 million-customer base for fixed and mobile telephony, broadband and television.
Posted
on : Sat, 14 Jan 2006 20:25 GMT | Business News
By : Rob Davis
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