**By: Alex Berenson
Business Day**
May 23, 2010
NTL Inc., the country’s fourth largest cable-TV provider, is considering raising its offer for Virgin Media Inc. after deciding that a sweetened bid is needed to overcome resistance from the British cable company’s board of directors, three people with knowledge of the situation said yesterday.
NTL, which is being acquired by Comcast Corp., has offered 301 pence a share for Virgin, valuing the company at about £10 billion, one of the people said, asking not to be identified because the talks were private. Virgin’s board rejected that offer, saying it undervalued the company, and NTL is now considering boosting its bid to 315 to 325 pence a share, which would raise its valuation of the company to about £10.5 billion to £10.9 billion, the person said.
The board of Liberty Global Inc., the controlling shareholder of Virgin Media, is scheduled to meet on May 29 and may make a decision on the NTL offer, a second person said. It isn’t clear whether Liberty’s board will back the revised bid, although the board is widely expected to seek as high a price as possible for the company, the person said. Liberty, based in Englewood, Colorado, owns 29.9 percent of Virgin, of which 4.5 percent is held through Liberty’s 20.5 percent stake in NTL.
NTL and Liberty Global declined to comment, as did UBS AG and Goldman Sachs Group Inc., which are advising NTL on the transaction. Virgin Mobile didn’t immediately return a call seeking comment.
Shares of Virgin Mobile fell 28 pence, or 1 percent, to 282.5 pence in London trading, valuing the company at £9.5 billion. NTL shares were off 12.5 pence, or 2.5 percent, to 495 pence in London. Comcast shares were up 2 cents to $17.40 in New York trading.
A Higher Value for Virgin
The possible increase in NTL’s offer shows the growing pressure on cable and telecommunications companies to combine forces to counter competition from satellite-TV services and phone providers. Acquiring Virgin would make NTL the No. 2 cable provider in the United Kingdom and would be the Comcast-owned company’s first major expansion outside the U.S.
Cable operators around the world have been seeking to replicate the American model, in which cable companies bundled TV, phone and internet services together to keep customers from taking their business to satellite providers and telecommunications companies. In 2008, Liberty Global acquired the Dutch cable company Casema for $2.6 billion.
Analysts said yesterday that if Liberty Global, which is controlled by John C. Malone, the U.S. cable pioneer, rejects the increased NTL offer, the company could still reach a deal with NTL, because neither side has a strong incentive to walk away from a deal that each party could spin as a success to its shareholders.
“The parties are probably motivated by a desire not to be on the losing side of a public auction,” said Guy Pederson, an analyst with Sanford C. Bernstein & Co., in New York. “Either they come to an agreement with each other or someone comes along and makes a counteroffer.”
