Shares of Virgin Mobile Holdings Plc, the UK mobile-phone provider controlled by Richard Branson, climbed to a record after cable company NTL Inc said it's planning an £835 million (US$1.44 billion) takeover bid.
NTL plans to offer £3.23 in cash or 0.09298 of an NTL share for each Virgin Mobile share, NTL said in a statement yesterday. Virgin Mobile shares jumped as high as £3.45 after the company said in a statement that it's "mindful of its duty to maximize value for all shareholders."
Shares of Trowbridge, England-based Virgin Mobile, the country's fifth-biggest wireless company, before yesterday gained 37 percent this year on optimism the company may be acquired.
NTL, which said it plans to adopt the Virgin brand on all services following the transaction, wants to add a cellular offering to its Internet, television and fixed-line phone packages.
"It is very ambitious," said Julian Hewett, a telecommunications analyst at Ovum Ltd. "NTL already has a lot on its plate. But from Richard Branson's point of view, it makes a lot of sense. It's extending the Virgin brand rather nicely."
For Hook, England-based NTL, Britain's largest cable operator, a deal would be its second multibillion-dollar acquisition in as many months.
In October, NTL agreed to buy smaller UK cable provider Telewest Global Inc for US$6 billion.
The two companies are uniting to cut costs and compete with British Sky Broadcasting Group Plc, the country's largest satellite television provider.
NTL, whose stock closed at US$60.10 last Friday in New York, said the takeover talks with Virgin Mobile are "preliminary" and there's no guarantee of an offer.
Branson's Virgin Group Ltd plans to exchange its 72 percent stake in Virgin Mobile for NTL stock, NTL said.
A deal would make Branson, 55, NTL's biggest shareholder with a 14 percent stake, and pitch him against BSkyB's largest investor, Rupert Murdoch's News Corp.
Branson's Virgin companies range from airlines and a railway to mortgages and soft drinks. News Corp publishes UK newspapers including the Times and the Sun.
Virgin Mobile has 4.15 million users compared with 15 million for the country's biggest operator, O2 Plc, which is itself being bought. NTL and Telewest have about 5 million subscribers combined, compared with BSkyB's 7.8 million digital television viewers.
Virgin Mobile doesn't own a mobile-phone network, but buys capacity from T-Mobile International AG, the wireless business of Deutsche Telekom. T-Mobile has agreed to supply Virgin Mobile after a takeover by NTL, NTL said in its statement.
A takeover of Virgin Mobile by NTL would further blur the line between the UK's media and telecommunications companies.
Each industry is seeking to supply consumers with all their communication and entertainment needs. NTL already uses the Virgin brand for its wholly owned Internet unit, Virgin.net.
Last month, Virgin Mobile said fiscal first-half profit jumped 40 percent because of cost cuts. Net income in the six months to Sept. 30 climbed to £27.5 million from £19.6 million. Customer additions at Virgin Mobile in the third quarter missed some analysts' expectations. It added 44,000 net active customers in the three months to Sept. 30, trailing a Credit Suisse First Boston estimate of 121,000.
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