LONDON — Cable operator Telewest and cable and satellite TV programmer Flextech have confirmed that they intend to merge.
In a statement headed “possible merger,” Telewest and Flextech said they were “contemplating a recommended merger of the two groups.” The complicated ownership of both Telewest and Flextech is the likely reason for the lack of a sealed agreement.
But while the signatures are not yet in place, most of the details of the deal are.
Flexing for $3.2 bil
Telewest will pay £2 billion ($3.2 billion) in stock for Flextech. As widely expected, Flextech chief exec Adam Singer will assume the same position in the new company, while Telewest chief exec Tony Illsley will become managing director.
The companies also said that they were seeking a new name for the group, and that finalization of the deal should come by mid-January. The two major shareholders will be U.S. conglom Liberty Media at 24.8% and software giant Microsoft at 23.6%.
Liberty, Microsoft on top
At present, Liberty owns 21.6% of Telewest and a controlling 36.7% in Flextech. Microsoft holds 29.9% of Telewest, but that stake still has to be cleared by European regulatory authorities.
Telewest and Flextech intend to focus on creating interactive TV content to up the appeal of Telewest’s digital platform. Telewest said it intends to raise an additional $480 million for that purpose next year.
The merged company will make for a stronger rival to satcaster BSkyB, the dominant player in U.K. pay television. As well, integrating the two puts Telewest on a better footing vis-a-vis fellow cabler NTL, which is absorbing the residential business of Britain’s third cabler, Cable & Wireless Communications, in a $13 billion deal. Many observers believe there eventually will be only one major cable company in the U.K.