Brit cabler on the block
Consortium circles cable company
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The Nasdaq-listed group, which completed its $6.43 billion acquisition of rival cable operator Telewest earlier this year, disclosed a sharp drop in customers in its second-quarter results last week, and its share price has fallen 20% over the past four months.
That slump has prompted renewed speculation of a takeover bid, and a group of four private equity investors is now understood to be eyeing the company.
Last year NTL rejected an unofficial takeover approach from a consortium thought to have included Apax Partners, Cinven and Permira, claiming that the $17 billion offer undervalued the company. Disgruntled shareholders have now written to NTL to ask why that offer was nixed and demand the board consider future offers.
"I certainly think that it's being looked at," said Janet Goldsmith, joint managing director at consultancy Mediatique. "Potentially, there's a good opportunity there."
According to Goldsmith, NTL should be well positioned to benefit from the growth of broadband in the U.K. thanks to its cable infrastructure. However, she added that any new investor would be faced with a considerable challenge due to BSkyB's dominance in the market.
NTL is facing growing competition for broadband customers from the likes of Orange and BSkyB. It's hoping that last month's acquisition of Virgin Digital will give it a competitive edgeas it launches the U.K.'s first "quad play" offering: combining fixed and mobile telephony, digital television and broadband Internet access. In addition, it saw $28.4 million in cost savings during the last quarter as a result of the Telewest merger.
However, following last week's results, NTL chairman Jim Mooney admitted the company would be open to any bid that maximized shareholder value.
It is not yet known whether Apax, Cinven or Permira are involved in the new consortium.
