The news that private equity group Carlyle is ready to make an $8 billion bid for Virgin Media (VMED), has bankers scurrying to ready a sales process as they believe the bid will trigger a series of other bids from companies. Virgin Media has as its largest shareholder Richard Branson.
Virgin Media was formed from the merger of NTL and Telewest. Branson sold his mobile phone business to NTL last year in return for about an 11 percent stake in the company, which was then rebranded as Virgin.
Other former suitors have also indicated an interest as Providence Equity, is said to be interested again. They represented a consortium last year which approaced the company with a $10 billion offer.
It seems the offer by Carlyle is lower because of the perception that in the UK, satellite provider BSkyB is winning the TV battle. That's even with cable reaching its highest penetration in Britain in five years, now reaching 13.4 percent of all British homes. Virgin gained 36,100 new subscribers during that time. It's the first time since 2001 that cable outperformed satellite in the country.
There is already a group of Virgin Media shareholders saying the price doesn't reflect the value of the company, whose shares finished at $25.55 at the end of Friday's close. After hours it's down to $24.33.
Virgin Media filed a lawsuit against BSkyB in British High Court for dropping five basic channels from its service over pricing of its carriage fees. Sky should file their defense this week in the case.
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