Private equity circles Virgin Media

[BGonaSTICK]

Weekend reports that UK quadruple play operator Virgin Media was up for sale have gained strength with Dow Jones Newswires, quoting a person familiar with the matter, suggesting that private equity firm Carlyle Group, has made a preliminary offer, valuing the company's equity and debt at around £11.5 billion (E17 billion). Carlyle has offered $33 (E24.31)and $35 per share for Virgin Media, the person said. The offer would value Virgin Media's equity at around £5.5 billion. The company has roughly £6 billion of debt.

In response, Virgin Media has asked Goldman its adviser, to "effectively start to run an auction," it was suggested. Other private firms including Providence Equity had also expressed interest in Virgin Media. A previous approach including Providence, Kohlberg Kravis Roberts and Cinven, failed to result in a deal because of opposition from key shareholders, including influential New Jersey hedge fund owner Bill Huff. Huff is now far lower down the group’s share register, with only 4.9 per cent.

Carlyle would need to negotiate with Sir Richard Branson, Virgin Media's largest shareholder with a 10.5 per cent stake for its bid to succeed. Sir Richard reportedly wants to retain a stake in the business. City sources have indicated that Sir Richard was willing to weigh up any offer, and could seek to roll over some of his stake into a new entity.

Virgin Media confirmed later on Monday July 2 that it has received a proposal to acquire 100 per cent of the common stock of the Company, but had not engaged in negotiations with the offeror. A statement from Virgin Media said the proposal was based on public information and subject to various conditions, including a due diligence examination and a period of exclusivity.

The proposal also states that it will be withdrawn if its terms are publicly disclosed. Prior to the receipt of the proposal, Virgin Media's Board of Directors had initiated a review with Goldman Sachs of strategic alternatives, including a process for a possible sale of the Company. The proposal will be considered as part of the review. However, there is no assurance that any transaction will occur or, if so, at what price. Virgin Media does not intend to comment further on the process unless and until a definitive agreement is executed or the process is abandoned.