New-York Listed UK cable and telecoms company NTL Inc has made its long-expected offer for the UK’s second largest cable operator Telewest Communications Plc, for $1.75bn at a 55% premium to its current share price. But reports suggest the deal is likely to be blocked by 27% shareholder US West Communications Inc, which holds veto powers through its board executives and also looks set to launch its own takeover bid. NTL’s current holding in Telewest is through TW Holdings Inc, a 50% joint venture it has with Tele-Communications Inc. TW Holdings holds a 53% stake in Telewest. The takeover of the company could only happen as a result of a negotiation with Tele- communications, and with the possible approval of the other majority shareholders, SBC Communications Inc and Cox Communications Inc, which each hold 10%. NTL was previously in negotiations for the takeover of Telewest and another UK cable operator General Cable Plc, to form its own cable conglomerate, but negotiations broke down (CI No 3,218). NTL’s negotiations with Telewest have taken sometime to reach a final offer. In the meantime, US West has looked like an equally likely bidder. US West has the advantage of holding a stake in One-2-One, the mobile phone company which it co-owns with Cable & Wireless Plc – giving US West a relationship with Telewest’s main competitor, Cable & Wireless Communications Plc. Cable & Wireless Communications Plc was formed by Cable & Wireless Plc when it merged its own Mercury Communications Ltd telecoms carrier with the UK cable television units of Nynex Corp, Bell Canada International Ltd’s Bell Cablemedia Plc and Videotron Holdings Plc. Telewest, axed 25% of its workforce back in August in an effort to cut its spiraling costs, says it has now completed over 70% of its planned network enabling it to market its services more aggressively.
If Telewest is to be taken over by NTL, the current investors will be looking for a takeover well over the current share price, and higher than that currently offered. Although the offer of 1.11 pounds per share is well ahead of Telewest’s current price of 0.72 pounds per share, it is still a way off the company’s opening price of 1.82 pounds at the company’s launch three years ago.
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