LONDON — U.K. cabler NTL has agreed to buy Richard Branson’s Virgin Mobile for £962.4 million ($1.67 billion).
Deal, which includes licensing of the Virgin brand, creates the U.K.’s first quadruple-play provider, bringing mobile, fixed-line, broadband and TV under one roof.
According to Steve Burch, NTL prexy and chief exec, the combined company eventually will rebrand all its cable TV and Internet services under the Virgin brand, which has a higher profile.
However, the merger of Telewest Global, the cable rival NTL acquired earlier this year, remains the priority for NTL brass.
Under the deal, NTL has agreed to license the Virgin brand for 30 years; Burch described the brand as “an extremely powerful engine for future growth.”
NTL has been dogged by a perception that it provides poor customer service.
The Virgin Mobile management team is not expected to change as a result of the takeover.
Virgin Mobile shareholders have been offered three options by NTL as part of the takeover deal: a cash offer of $6.44 a share, 0.23245 NTL share for each Virgin share or 0.18596 NTL share plus $1.17 in cash. The cash offer is a premium of 19.6% over Virgin Mobile’s share price on Dec. 2, the last business day before NTL’s first offer.
“This deal has taken a long time to come through. Considering that Virgin Mobile’s board has backed it, the minorities should have no problem accepting it,” Damien Chew, analyst at ING Financial Markets, told Reuters.
The Virgin Group, which holds 71.3% of Virgin Mobile, will retain a 10.7% holding in the merged business after opting to take a blend of cash and shares. This will make Branson the largest shareholder in the merged company.