ALL Virgin / NTL merger discussion

[Escapee]

Originally Posted by andygrif

I think you're getting C&W mixed up with Telewest who, it was announced, that ntl will be merging with. There are a few subtle differences between a takeover and a merger - usually to do with equity, share value and board level movements - so even though ntl will be (in effect) buying Telewest they are officially merging.

At this point they could change the name of either, both or neither.

Then when you get to Virgin, ntl publicly stated an interest into a mobile network to offer a "quadruple play" of services (TV, broadband, home phone, mobile phone) presumably to out-play Sky who will be doing broadband and home phone later this year and BT who will be doing Freeview and Video on Demand later this year.

CableTel had a crappy name for itself. When they changed to NTL they started all over again and now the ntl (lowercase) name has a poor public image and stigma attached to it, in a way that Sky do not. It doesn't matter whether the perception is true or not, but ntl are perceived in marketing terms as second or third rate.

That's where Virgin comes in. The Virgin brand is extremely strong. British people have a huge admiration for Branson as an individual and even after all these years the Virgin brand is a cool one to be associated with - the public buy into it.

But this is where I think it's a dangerous game for Branson; the history shows CableTel and ntl making a mess of things from a brand point of view - effectively killing the brand with consumers. It is dangerous to create a Virgin branded cable system that will suffer the same fate in a few years from now. Branson has come incredibly close to doing it with the trains, but managed to claw it back - I don't think he'd be that lucky with cable TV.

So there you go...In a nutshell, that's why they would want to change the name - and I have no doubt that Virgin TV would be more sucessful for a while than ntl is right now - but I also doubt it would last.

I agree, I think the main benefit to ntl would be a better image with the new name. It would only mean another known good name getting tarnished as you rightly said cabletel did to ntl.

The term "Deja vu" springs to mind

[McDave]

Well I hope Richard if he becomes involved in this opperation will make things better for everyone.

The only thing I really want is to make the cable tv service faster; when you try and change chanel or open an interactive menu when watching TV is so slow, unlike sky. I don't use any of the menus for this reason. Also the ntl box tends to crash and it must be re-set.

[injuneer]

I see in the press this morning that Ntl had upped its offer to 372p per share and indications are that this could be the clincher for a deal.

[paul11974]

Originally Posted by zaax

http://www.theregister.co.uk/2006/01/09/virgin_ntl/

Nice bit of deija vue. Will NTL go tit's up this time. They should be spending the money getting their systems right before wasting it buying Virgin.

yes spend more money rolling out video on demand before spalshing out on virgin

[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!

Maybe you think they should spend shares rolling out VOD and improving systems?

---------- Post added at 23:37 ---------- Previous post was at 23:34 ----------

Originally Posted by Chrysalis

How is this to be funded do ntl have cash lying around to cover it or is it done in some fancy manner which doesnt need free cash?

Erm. It's a merger. If it involved cash it'd be a takeover.

If you were to read the stories (not you personally but everyone commenting on this) you'd have seen that Branson et al are being offered a percentage of the combined company, which with this increased offer will have gone up. They are *not* being offered cash. 372p/share is an equivalent price in ntl/Virgin Mobile combined shares.

[Chrysalis]

so in your saying if they are holding out for increased amount per share as reported it means they get bigger % of total ownership of ntl and no cash involved at all?

[Ignition]

Originally Posted by Chrysalis

so in your saying if they are holding out for increased amount per share as reported it means they get bigger % of total ownership of ntl and no cash involved at all?

No they get more shares in ntl, total ownership is misleading. No cash involved.

[nidave]

Branson subsidises NTL's bid for Virgin Mobile

Source MediaGuardian:

Sir Richard Branson offered to stump up his own cash last night to realise his dream of creating Virgin TV by subsidising a new bid by the cable group NTL for his publicly listed phone business, Virgin Mobile, that values the company at £961m.

http://business.guardian.co.uk/story/0,,1686387,00.html

[mod edit (Chris T)]: Please do not reproduce copyright material in full in your posts. Post a snippet, and then the link.

[SMHarman]

Originally Posted by Chrysalis

so in your saying if they are holding out for increased amount per share as reported it means they get bigger % of total ownership of ntl and no cash involved at all?

Effectively yes. If NTL is £3 a share and they want to pay £600m then they need to give them 200m shares, to increase the bid to £900m they need to give them 300m shares, however it is not quite that simple as it is arguable that as they have just paid £900m for the assets of Virgin they must be worth that much so therefore the share price of NTL will increase in value to reflect the increase in the assets (the Virgin Assets) that NTL now owns so this is not a linear thing.

[Chris Norris]

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!

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.

Originally Posted by Ignition

Erm. It's a merger. If it involved cash it'd be a takeover.

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!

[Pierre]

Originally Posted by Escapee

I agree, I think the main benefit to ntl would be a better image with the new name. It would only mean another known good name getting tarnished as you rightly said cabletel did to ntl.

The term "Deja vu" springs to mind

To be fair, nobody had heard of NTL until Cabletel took it over. It may have had a good name within the Broadcasting industry but Joe Bloggs down the street wouldn't have heard of it.

I think the attempt to get holdof the Virgin brand is a very good idea. People trust it, even when the product is not so good (i.e trains).

The new company needs to distance itself from ntl and telewest.

Everyone wants it to happen and I believe it will.

I am also informed that as the OFT have not referred the merger that it will happen as early as February 1st.

[zaax]

Branson - now that is a good thing. Do I get virgin miles?

[Pierre]

Originally Posted by Stuart C

I dunno. In my experience, Virgin Mobile's service is ,at best, mediochre (that's assuming it works at all), and every time I have been on Virgin trains, they have been terrible..

Virgin mobile use the vodafone network, so it shouldn't be that bad.

[Russ]

Originally Posted by Pierre

Virgin mobile use the vodafone network, so it shouldn't be that bad.

T-mobile, not Vodafone.

[Jon M]

Our corporate contract is with T-Mobile, I've never had as many complaints about coverage as we do now. (we had Vodaphone before)
Can't say that I'm impressed with them in any way other than being able to undercut the competition substantially.