LONDON — NTL Inc. and U.S. West have emerged as rival contenders to take over Telewest, the U.K.’s second-largest cable operator.
NTL, which is already a leading player in the British cable sector, has been negotiating with Telewest for several months, and has reportedly made a stock offer that would value the company at $1.75 billion. That’s more than 50% higher than Telewest’s languishing share price.
But U.S. West, the American telco that owns 27% of Telewest, is understood to oppose the deal, and is considering a $1.35 billion counter-bid to buy out its management partners.
These include three other U.S. cablers — TeleCommunications Inc., with a 27% stake, and SBC Communications and Cox Communications with 10% apiece. All three are keen to sell out, having watched Telewest’s stock lose more than half its value since the company floated on the London Stock Exchange three years ago.
Telewest was itself formed from a series of mergers between the U.K. cable interests of its shareholders, in an attempt to stem the tide of red ink that threatened to engulf the British cable sector. But the industry has continued to struggle, and U.S. West’s reluctance to swap its stake in Telewest for a smaller one in the merged NTL/ Telewest reflects a loss of confidence in the idea that the business can be salvaged by economies of scale.