A group of private equity firms is reportedly interested in bidding for both NTL and Telewest.
This development comes just days after NTL agreed to acquire its smaller rival for $6 billion in cash and stock. NTL and Telewest are the last major cable companies in the UK following a wave of consolidation in the 1990s.
Citing people familiar with the matter, the Wall Street Journal (WSJ) article said that if the investor group proceeds, it would be one of the biggest and most complex private equity transactions undertaken because it would involve buying two companies already planning to combine.
The private equity group has also apparently contacted William Huff, the biggest shareholder in both NTL and Telewest. However, Mr Huff told the WSJ he would decline to sell his stake or recommend either company agree to any deal with private-equity firms.
The investor group hasn’t yet approached NTL and Telewest directly, and one person familiar with the group’s thinking told the WSJ that there was no guarantee a bid would ultimately emerge.
What makes NTL and Telewest such an attractive proposition is that once they have merged, it will be the UK’s second largest communications company with 4.3 million subscribers and combined revenues of GBP3.4 billion ($5.9 billion).
For years there was talk of a merger between NTL and Telewest, but financial problems delayed their inevitable pairing. NTL went into Chapter 11 bankruptcy protection and Telewest Communications underwent a restructuring that saw its bondholders receive 98.5% of the company’s shares.
The speculation of financial institutions acquiring the two companies, comes after the Spanish cable operator Grupo Corporativo Ono, along with a consortium of investors, opted to pay E2.25 billion ($2.75 billion) in August for the fixed-line telephone and cable unit of Auna Telecomunicaciones, Spain’s second largest telecoms group.
In September, Switzerland’s largest broadband cable company, Cablecom Holdings, was acquired by US cable TV giant Liberty Global for $2.18 billion, a move that halted Cablecom’s plans to float the business.
