Charles Gurassa: The boss who was left out of the loop

The ex-chairman of Virgin Mobile speaks for the first time about the takeover talks with NTL that went on behind his back, and how he played hard to win a high price from the cable guys for his investors
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You can't accuse Charles Gurassa, the former chairman of Virgin Mobile, of sour grapes. In fact, his small vineyard in Italy will produce 700 bottles this year.

"The white is very good this year, but the red is a bit tart. By the time you get to the second glass, it's all right."

As chairman of Virgin Mobile, Gurassa, who left the group earlier this year, didn't have much time to tend his vines. The operator was the toast of the City, gobbling up market share in the UK with a mixture of cheap tariffs and sassy marketing. But then the party came to an end when NTL, the cable group currently attempting to buy ITV, completed its £900m takeover of Virgin Mobile, and Gurassa waved goodbye.

In his first interview since the deal was done, he reveals that he has already moved on to new pastures. He is chairman of Lovefilm, the UK's largest online DVD-delivery company, with a 20 per cent market share.

Gurassa was approached by a headhunter about the job and accepted on the basis that the business model was sound and management was "bright and aggressive".

Lovefilm now has 400,000 subscribers who pay a monthly fee for ordering DVDs online. Customers keep the titles for as long as they like and return them when they want to order something else.

"Subject to market conditions, we [Lovefilm] could float next year. Market penetration in the UK is about 3 per cent. In some parts of the US it is 11 per cent. And nobody in continental Europe is of a comparative size, so the potential for growth is huge," he says.

Gurassa has also spent the past six years as a non-executive director at the giant leisure group Whitbread, and is chairman of Worldwide Excellerated Leasing, a car rental group backed by private equity firm Cerberus, which owns the Alamo Rent-a-Car and National Car Rental businesses in the US.

"The group turns over $3bn [£1.6bn] worldwide. It is certainly our intention to float that business on the New York Stock Exchange relatively quickly, subject to conditions."

But as NTL prepares to make another industry-transforming deal with the potential takeover of ITV, Gurassa says he has no regrets about the sale of Virgin Mobile and no misgivings about the difficult position he was put in at the time. He was told about the existence of talks with NTL only when it became clear an impending media report would reveal that Sir Richard Branson - whose Virgin Group owned a 71 per cent stake in Virgin Mobile - had agreed a deal with its rival.

It appeared that the company he chaired had, in effect, been sold behind his back by its largest shareholder. Gurassa quickly instructed Morgan Stanley, the investment bank, to advise him.

He has remained silent about the takeover until now. Just how did he reconcile the needs of minority shareholders with the majority shareholder's determination to sell the business? And how did he feel about being left in the dark on the deal until the last possible minute?

"Our position was not the same as other companies because we had a 71 per cent shareholder," he says now. "Any potential buyer had to ensure that the shareholder was onside before they had a chance of making a successful bid.

"In the case of NTL, the company was after a branding deal for its three businesses [TV, internet and phone] and Virgin Group said it would only do a deal if it included Virgin Mobile. Finally they came to a position they thought was acceptable and Virgin Group informed me that it was now up to me to have discussions with NTL."

Gurassa was in a difficult position. On one hand Sir Richard had already given his support for the takeover, making its completion almost a foregone conclusion. However, Gurassa still had Virgin Mobile's other shareholders to worry about.

Any perceived failure to squeeze the highest possible offer out of NTL would have led to accusations that he and his board were too close to Sir Richard and that the Virgin king was still taking liberties with public markets.

As it happened, NTL's original offer of 323p per share for Virgin Mobile was immediately dismissed by Gurassa. "I discussed it with the board and decided very early on that the proposal was not acceptable. From that point on, the negotiations were between myself and NTL. They went on for a number of months. When it became apparent that NTL had reached the end of the road in terms of what they were prepared to offer, I went to Virgin Group and negotiated with them to offer a further contribution to provide a deal that would be acceptable to independent shareholders."

Gurassa's horsetrading paid off. In the end, Sir Richard coughed up £11m to increase the offer for Virgin Mobile's minority shareholders from 346p per share (the revised NTL bid) to 372p. That figure was almost double the 200p flotation price for Virgin Mobile.

Gurassa says: "My own view was that the deal worked well for all three parties. Virgin Group behaved, I think, absolutely properly as an investor in a public business. At no time did it say or infer, or try and pressurise me, that this was a done deal. They gave their view of the deal, but recognised that as an independent public company we had to take our own view."

At the time, Gurassa's role in the takeover of Virgin Mobile got almost as much attention as Sir John Bond is now receiving as the new chairman of Vodafone. A significant number of key investors do not want Arun Sarin to continue as chief executive of Vodafone and are now looking to Sir John to continue to restore the company's flagging share-price performance.

So does Gurassa have any words of wisdom on what an incoming chairman has to do to win over directors and investors?

"You learn quickly to go out and listen and talk," he says. "You create a board around you that has expertise. Boards should have the technical skills that add value to management, but they should also be able to make their own evaluations of what is going on.

"The chairman's job is not to run the business," he adds. "Potentially, a great cause of corporate problems is that you get this two-tier approach when a chairman and a chief executive both think they know what's right. You have to have a chief executive you trust and then back his strategy.

"If you think they are the wrong person, then change them, but don't try and run the business or second-guess the person running the business."

Despite leaving the world of mobiles behind, Gurassa is still chairman of two big businesses and a non-executive director of a third. If the rental group and Lovefilm both float successfully in the next 12 months, he might be in line for a vintage year.



15 February 1956.


BA in economics - University of York; MBA - International Management Centre, Buckingham.


1978-89: joined travel group Thomas Cook as a graduate trainee. Went on to become general manager of retail.

1989-99: British Airways. Positions included head of worldwide sales; director of passenger and cargo business.

1999-2000: group chief executive, Thomson Travel Group.

2000-03: executive chairman, TUI Northern Europe (formerly Thomson Travel Group) and TUI Airline Group.

2003: non-executive chairman at consultancy 7days.

2004-06: non-executive chairman, Virgin Mobile.


Non-executive chairman, National Trust Enterprises; chairman, Worldwide Excellerated Leasing; non-executive director, Whitbread.