LONDON (Dow Jones) -- U.K. cable operator NTL Inc. on Tuesday said it has agreed to buy Virgin Mobile, the virtual mobile network operator mostly owned by Richard Branson, for 962.4 million pounds ($1.68 billion).
NTL said Virgin Mobileshareholders can choose between a cash offer of 372 pence a share, 0.23245 NTL shares, or a combination of 0.18596 NTL shares and 67 pence in cash.
The Virgin Mobile board has recommended the offer and Branson's Virgin Group, which controls around 72% of the shares has agreed to vote in favor of the offer, irrespective of whether any higher competing offer is made.
Shares in Virgin Mobile, which have climbed almost 30% since December in anticipation of a deal, were unchanged at 387 pence in morning trading.
The deal will make NTL a so-called quadruple-play operator, offering television, broadband, fixed-line and mobile telecoms services.
The company said it hopes to increase average revenue per user by cross-selling mobile services to existing customers and broadband and television services to Virgin customers.
"Central to today's announcement is our strong belief that offering a quad-play underpins true media convergence," said James Mooney, NTL's executive chairman. "NTL is now truly unique in its mass market product offering."
However, Julien Roch an analyst at Merrill Lynch, was skeptical over how big of a difference the quadruple-play offering would make.
"We do not think the quadruple play represents a credible threat (to competitors)," said Roch.
"It's not about having all the products, it is about having the best products," he added. "The key to this take-over is the brand, and that is really what NTL is buying."
Virgin Mobile, which piggybacks off of Deutsche Telekom's (DT) T-Mobile's network, rejected a $1.4 billion offer from NTL in December and has been in discussions about the revised offer since January.
NTL has also entered a 30-year licensing agreement with Branson, to use the Virgin brand for NTL's consumer business.
"This offer reflects the strong operational and financial performance of Virgin Mobile and represents an excellent opportunity for Virgin Mobile shareholders to realize the significant increase in shareholder value since flotation," said Charles Gurassa, chairman of Virgin Mobile.
(END) Dow Jones Newswires "
Posted to the site on 4th April 2006
Posted to: www.cellular-news.com/story/16817.php