Virgin Media calls for first takeover bids

Troubled British cable operator Virgin Media has formally bowed to takeover pressure, calling for interested bidders to file formal expressions of interest in buying the firm by the first week of August, people familiar with the situation have said.

The move is the first step in an eventual auction of the business, which offers residential and business telephony, broadband and TV services, to the highest bidder.

Virgin Media, previously known as NTL Telewest, said on July 2 it had received a bid approach from an unnamed group.

It was eventually shown that the initial offer came from private equity firm Carlyle Group. Virgin Media's market capitalisation is £4.4 billion, while it is also saddled with another £6 billion of long-term debt, already heavily reduced after a series of debt-for-equity swaps.

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Since then about 10 other suitors, largely private equity firms, have expressed an interest in taking control of the business.

Private equity firms Providence Equity Partners, Blackstone Group, Cinven and Kohlberg Kravis Roberts are considering a joint bid, while Texas Pacific Group and Apax Partners are also interested, the sources said.

Press reports have said US cable operator Comcast is considering either making a bid or partnering with a consortium, as is Liberty Media, Time Warner and MTV owner Viacom. As well as its cable network and nationwide infrastructure, Virgin Media also owns low-rent but profitable broadcaster Sit-up, responsible for a myriad of shopping and low-budget entertainment channels on both satellite and Freeview. Its valuable Freeview channel spaces make it very appealing to broadcasters looking to hive it off as part of a consortium bid.

The cable operator's Nasdaq-listed shares have risen more than 23 per cent to $30.00 since the announcement but closed on Friday at $27.89. Analysts have said any offer is likely to be pitched at between $30 and $35 a share.

Virgin Media rebranded amid a £25 million marketing campaign, pushing is quadruple offering of cable television, landline telephone, broadband and mobile phone services, but has struggled following a very public and damaging dispute with satellite television rival BSkyB over the price the two groups should pay to carry each other's channels.

Virgin Media declined to comment on the sale process and the suitors either declined to comment or could not be reached.

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