Is Virgin Media vulnerable to takeover?

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The predictions are reasonably gloomy, with a good number of pundits expecting choppy times in the debt markets for some time yet to come. What's perhaps most damaging to Virgin Media is the sheer uncertainty; a stable market, even if borrowing isn't quite as cheap as it has been, would at least give the private equity firms who are circling Virgin Media the leveller playing field that they need to stack up the required funding.

And it's private equity firms who are the prime candidates for Virgin Media. The Carlyle Group, as was widely reported, triggered the current sale process, and subsequently names such as Providence Equity Partners, Liberty Media, Permira, Apax, Kohlberg Kravis Roberts & Co, Cinven and the Blackstone Group have been linked with a potential bid. The majority, if not all, of these names have, unsurprisingly, been hit by aforementioned issues with the market.

Sale or no sale?

This has, ultimately, led to a deep-seated suspicion among some shareholders of Virgin Media that their suitably fattened goose - and a $10bn+ potential asking price, as was the case just a month or two ago, is some goose - may not be sold off after all. Much though many investors chase communications stocks, the stability in the marketplace for such a big deal is most certainly lacking, and even those still inclined to pursue a transaction simply don't have the resources in the locker to close one, nor the ability to attract what they need to do so.

So this is a story that, thus far, has an uncertain end. The current scenario sees Virgin Media in a little bit of a limbo, with an interim boss, a rapidly cooling sale and an increasing tough marketplace.

There's little doubt that Virgin Media will ride out the latter, but the chances are it may come out in less impressive shape. And that $10bn price tag may just be a pipe dream as a result. The next few months could very well be crucial.

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