Sir Richard Branson threw NTL's £834m bid for Virgin Mobile into disarray by suggesting yesterday that if a further £100m is tabled the deal would be struck.
The board of Virgin Mobile, led by its chairman, Charles Gurassa, had earlier unanimously rejected NTL's offer as too mean.
But Sir Richard, who has verbally agreed to sell the 72 per cent stake held by his Virgin Group at the 323p a share offer price, told radio listeners on Radio Five Live: "We have got small shareholders in Virgin Mobile who must be protected. That is why we are leaving it to the independent directors.
"We are talking about £25m between what the independent directors are talking about and what NTL have offered." The City took the comments to refer to the 28 per cent of Virgin Mobile owned by institutional investors including Morley, Aberforth and Fidelity, which snapped up a further 163,700 shares at 343.5p yesterday. A fresh offer at that level would value the country's fifth-biggest mobile operator at £920m.
Institutions are not against the deal in principle, but want a higher price. Sir Richard would take payment in NTL shares, giving him a stake of about 15 per cent in a combined group.
"I don't think that NTL are going to fall out for what is a relatively small amount of money," Sir Richard added. "I have a feeling that somehow an agreement will be reached." His off-the-cuff comments fuelled hopes for a more generous bid and spurred Virgin Mobile shares 9.5 to 355p.
Sir Richard's comments prompted Virgin Mobile to clarify it had only discussed the offer NTL tabled and had not discussed a price at which they would recommend an offer. Should NTL swallow Virgin Mobile, it could create a Virgin-badged television, internet, and fixed and mobile phone conglomerate to threaten the likes of BSkyB and fixed-line phone group BT.
NTL remained tight-lipped about its intentions, but it was thought that Simon Duffy, the chief executive, would be discussing his next move with directors in New York.
Mr Gurassa's rejection of NTL's offer was seen as an act of brinkmanship. Should he prove too aggressive, Sir Richard could step in to force through a deal. That would drive a wedge between him and minority shareholders.Reuse content