Virgin shares surge on Malone bid

Virgin Media has confirmed advanced takeover talks with John Malone’s Liberty Global as its London-listed shares surged 15 per cent.  Virgin Media has an enterprise value of some $20 billion (although a market cap of $10.4 billion), the bid is thought to be worth around £12 billion. The company’s main listing is on the Nasdaq in New York. Virgin’s share price over the past year it has risen strongly from a low-point of $21 to today’s $39.69.

Virgin Media has large stakes held by venture capital funds, including Capital World Investors (14.6 per cent), Capital Research Global (10.9 per cent), RBC Investment Solutions (8 per cent) and Manning & Napier Advisors (6.5 per cent).  It has annual revenues of some £3.9 billion, although carries a high debt burden. Operating revenues in 2011 were just £75 million generated by about 4.8 million subscribers. Virgin’s long-term debt, borrowings and mortgages, according to Virgin, amounts to some £5.8 billion.

Virgin Media is now the UK’s sole cable company having been formed by the merger of various initial (and mostly American) investors. Its constituent parts include names such as TCI/US West (which became Telewest), United Cable, General Cable, SBC Communications, EuroBell, CableTel/NTL and other smaller players. In April 2004 Telewest merged with Flextech.

Virgin Media has a 30-year licensing deal with Richard Branson’s Virgin Group, and at the time of the deal Virgin Group held a 10.7 percent stake, although that has since been reduced.



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