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ntl and Telewest Merger Announcement

# 3 October 2005, 10:25 by Cable Forum

ntl & Telewest Merger Announcement

NTL Incorporated (NASDAQ: NTLI) and Telewest Global, Inc. (NASDAQ: TLWT) announced today a definitive merger agreement under which ntl will acquire Telewest, creating the U.K.’s second largest communications company and leading triple play service provider with a cable footprint covering more than 50 per cent of U.K. households. The combined company will have nearly 5 million residential customers.

It will be the largest provider of residential broadband services in the country with 2.5 million subscribers, the second largest pay TV provider with 3.3 million subscribers and also the second largest fixed telephony provider with 4.3 million subscribers.

The combination of the two companies’ local access networks, which do not overlap, will provide a strong platform allowing for product differentiation and innovation and the delivery of unique packages of service offerings. The combined company will have the benefit of a much larger cable network and, together with Telewest’s content division, will strengthen cable’s position in the multi-channel TV marketplace. Additionally, the transaction will create substantial synergies and provide the impetus for increased product and technical innovation.

Consumers will benefit from greater choice, accelerated delivery of a broader range of personalised communications and entertainment services and even better value. On an unaudited pro forma basis for the twelve months ended June 30, 2005, the combined company would have had revenues of £3.4 billion (before adjustments) and operating income before depreciation amortisation and other charges (“OCF”) of £1.2 billion (before adjustments). The combination will benefit from strong cash flows underpinned by tangible cost and capex synergies, which are expected to make the transaction significantly cash accretive in 2006, before restructuring costs, and significantly cash accretive after all costs from 2007 onwards.

Under the terms of the transaction, approved by the boards of both companies, Telewest shareholders will receive $16.25 in cash and 0.115 shares of ntl stock for each common share of Telewest they own, for a total consideration currently valued at approximately $6 billion or approximately $23.93 per share. On this basis, upon completion Telewest shareholders will own approximately 25 per cent of the enlarged ntl. The transaction is subject to U.K. regulatory approvals, approval by the shareholders of both companies and other customary closing conditions. It is expected to close in the first quarter of 2006.

The Board of the enlarged company will consist of all the current directors of ntl plus two directors from Telewest. James Mooney will be Chairman of the Board of Directors, Anthony (Cob) Stenham will be Deputy Chairman and Simon Duffy will be the President and Chief Executive Officer. Telewest’s Acting Chief Executive Officer, Barry Elson, will leave the company upon the completion of the transaction and Telewest’s Chief Operating Officer, Eric Tveter, will leave the company at the end of 2006. Their agreement to stay during the coming months will allow Telewest to continue to benefit from their management and advice
during the completion of the transaction and subsequent integration programme.

Simon Duffy, Chief Executive Officer of ntl, commented: “This is a transforming transaction for the U.K. cable industry. It marks not just the culmination of a decade of consolidation but, more importantly, the creation of a new competitive force in the communications and entertainment sectors in the U.K. By sharing best practices across ntl and Telewest and by promoting innovation and leadership, the company will focus on enhancing dual and triple play penetration, improving sales and marketing effectiveness and driving customer centricity and service quality. This is a significant value creation opportunity for shareholders.”

More Information on what this means for Residential and business customers, click here.

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