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Virgin says NTL offer of £817m is not enough
By Amanda Andrews, Media Business Correspondent

http://business.timesonline.co.uk/article/0,,9071-1915586,00.html



VIRGIN MOBILE last night rebuffed an £817 million takeover bid from the cable group NTL.
The board of Virgin Mobile said that it had decided unanimously to reject the 323p a share offer because it “materially undervalued” the company.



Institutional investors in the mobile group are understood to be holding out for a bid of about 345p a share, which would value Virgin Mobile at about £891 million.

The board’s statement, released after the market closed, appears to contradict the wishes of Virgin Mobile’s biggest shareholder, Sir Richard Branson, who holds 72 per cent of the company. The entrepreneur told reporters in Hong Kong this week that he would be “happy” for other Virgin Mobile shareholders to accept NTL’s offer.

However, Sir Richard has also repeatedly made clear that he would abide by the decision of Virgin Mobile’s directors. The British tycoon has only one representative on the mobile group’s board, Gordon McCallum, who began working with the Virgin Group in 1996.

Shares in Virgin Mobile soared more than 10 per cent to 342p on Monday, after NTL confirmed its takeover approach, and have since risen a further 3½p to 345½p, suggesting that shareholders are hopeful of a higher offer from NTL. There has also been talk that a rival bidder could enter the fray, although telecoms groups such as BT, Vodafone, France Télécom, Hutchison Whampoa and Telefónica, the owner of O2, have all denied any interest.

In its statement, Virgin Mobile’s board said: “Mindful of its duty to maximise value for all shareholders, in reaching this decision the board has carefully considered the potential offer and consulted with major independent shareholders. The board has concluded that the potential offer materially undervalues Virgin Mobile.”

The mobile group’s institutional shareholders, which include Fidelity and Morley Fund Management, are believed to want at least 20p added to NTL’s mooted 323p a share offer, after positive market reaction to the proposed deal.

The City welcomed the tie-up, which would create the first “quad play” communications group — offering consumers mobile, fixed-line, broadband and TV services on one bill.

Sir Richard reportedly said this week: “I have made it clear that I’m happy to become the largest shareholder in NTL.”



It emerged last night that NTL is considering turning around its £3.8 billion takeover of Telewest, the rival cable company, making Telewest the acquirer, to reduce a £100 million change-of-control payment that Telewest would have to make to the BBC.

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