Virgin Media approached by Carlyle private equity group

July 2, 2007 - Virgin Media, the UK’s largest cable TV company, has received an offer from Carlyle Group, one of the world’s leading private equity groups, after similar approaches by other private equity firms.

Carlyle made a preliminary offer of $33 to $35 per share for Virgin, bringing the total value of the takeover deal, including Virgin’s debts of almost £6bn, to £11.5bn.  Virgin Media’s board has requested that its investment bankers, Goldman Sachs, conduct a valuation exercise and auction for private bidders, a process which is expected to take around six weeks.  If Virgin Media does go into private hands, it would be freed from reporting quarterly results, and its managers reportedly feel that it would be in a better position to grow.

Other interested parties include Providence private equity group, which is thought to have put together a consortium of private equity partners to make an offer for the operator.  Sir Richard Branson is the largest shareholder in the company, which has 9mn customers and an annual turnover of around £4bn.  Sir Richard’s Virgin Group, which owns 10.5% of the shares in Virgin Media, is thought to be supportive of a sale to private equity.

Many other shareholders are believed keen to sell at around the price offered by Carlyle, although the board of Virgin Media estimates that the company could be worth as much as $40 per share.  The approaches by private equity firms follow a tumultuous period for the operator, which has endured a difficult battle for UK customers, and entered a fierce legal dispute with British Sky Broadcasting over pricing terms to carry two Sky channels on its network.  In its last results, Virgin reported 3mn users of its television services, 3.4mn customers for its broadband services, 4.1mn fixed-line phone subscribers and 4.5mn mobile phone subscribers.