NTL prepares to resist £8bn takeover approach

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The Independent Online

NTL, the cable giant which is merging with Telewest and bidding for Virgin Mobile, is expected to resist any early overtures from a consortium of private-equity firms planning an £8bn takeover approach to the company.

The cable company is said to be confident that significant shareholders - including the veteran fund manager Bill Huff, who will be the largest individual investor with about 10 per cent of the combined group - will want to retain any significant upside from the benefits of the merger.

A consortium of private-equity firms has been sounding out banks about providing additional debt for what would be one of the world's biggest-ever leveraged buyouts. The consortium contains many of the most active private-equity houses, including Apax Partners, Cinven, Permira and Kohlberg Kravis Roberts, with others, including Blackstone, also believed to considering joining. The firms have been attracted by the strong cash flows from NTL and Telewest, which are merging to form a single, national cable company covering the UK and capable of challenging BSkyB's dominance of digital television.

The consortium's plans are not likely to be formalised until after the consummation of the merger, which is due, regulatory hurdles permitting, in the spring. But sources say that NTL believes it has the support of its shareholders to stay public until the fruits of the merger are being seen in financial results. The company surprised the industry last week by appointing Stephen Burch, an executive from the US cable firm Comcast, as chief executive in charge of the integration of Telewest. Simon Duffy, the architect of the £817m offer for Virgin Mobile, has been moved to a new post in charge of strategy.

NTL plans to use the Virgin brand, abandoning both NTL and Telewest names. The enlarged group will also be a so-called "quadruple play", combining mobile and fixed-line telephony with broadband internet and cable television. NTL is believed to have accepted it will have to sweeten the cash part of its offer to win over Virgin's minority shareholders, but observers do not expect significant movement until the new year.