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Originally Posted by Ignition
Call me an idiot but show me where real cash is involved in this deal?
Ah yes, it isn't cash it's all shares!
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There is cash involved in this deal. Shareholders are being offered an option of cash or shares. The Virgin Mobile minority shareholders have been expected to take cash all along, with Branson taking mainly shares. The new 'sweetener' now being talked about involves Branson taking a slightly higher proportion (20%) as cash so that he can increase the cash offer to the minority shareholders. This is why it's now being said he will end up with 12.5% rather than 14% of the combined company, because he is taking more as cash.
See
http://business.guardian.co.uk/story...686387,00.html for a good explanation.
This suggests Branson will receive £120 million in cash (£10 million being passed on to minority shareholders) and my own quick calculations suggest the 360p/share ntl is offering could be up to about £260 million if all minority shareholders took cash only. Therefore somewhere between £120 and £380 million in cash is involved in this deal, probably nearer the top end of that.
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Originally Posted by Ignition
Erm. It's a merger. If it involved cash it'd be a takeover.
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The distinction between "merger" and "takeover" actually relates to the relative size and/or management roles in the new company, rather than to whether cash or shares are involved. There is a tendancy for mergers to involve more shares, but this isn't what determines the name. See
http://en.wikipedia.org/wiki/Merger#Merger
In this case, I think it would be fair to describe the deal as a "takeover", but the distinction is far from clear.
Sorry for the lecture, but I'm revising for an exam in managerial economics for my masters so its good practice!