NTL sells Irish business to pave way for £5.5bn Telewest merger

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The Independent Online

NTL, the cable TV group, is poised to announce the sale of its business in Ireland, removing one of the last remaining obstacles to a £5.5bn merger with Telewest.

NTL, the cable TV group, is poised to announce the sale of its business in Ireland, removing one of the last remaining obstacles to a £5.5bn merger with Telewest.

It is thought that informal talks between Telewest and NTL, the two major UK cable players, have been under way for some time but the process is set to step up a gear with the appointment of financial advisers for both sides.

The merger has also been boosted by moves to divest businesses not wanted in the combined group. Telewest has hired Deutsche Bank to sell its Flextech content business. NTL, which has already sold its broadcast business, is due to announce it has sold its operations in the Republic of Ireland to Morgan Stanley for about €320m (£220m). Telewest does not have a business in Ireland.

The ultimate buyer of NTL's Ireland venture is the cable group UGC but Morgan Stanley is provisionally buying it to prevent the deal getting bogged down in a protracted competition inquiry. UGC, controlled by the US cable tycoon John Malone, already owns the Irish cable operator Chorus.

By "warehousing" the Irish assets with Morgan Stanley, the risks and any delay are offloaded by NTL. It is believed NTL has insisted on this arrangement so the sale goes through as quickly as possible and does not delay a merger with Telewest. The announcement on the sale of Ireland could accompany NTL's first-quarter results tomorrow.

NTL has used Goldman Sachs to advise on the Ireland divestment and the US bank would also handle the merger with Telewest. A merger of NTL and Telewest, which have each separately been through bankruptcy proceedings, should be agreed by the end of this year. The cable networks of the two companies do not overlap. NTL and Telewest declined to comment.

For its part, Telewest is shortly to begin a "beauty parade" of possible financial advisers, after its board gave the go-ahead for the NTL merger.

Simon Duffy, the chief executive of NTL - which, as the larger company would be the senior partner in any merger - has made it clear he does not think network owners should also provide content, and would insist on the disposal of Flextech. He believes networks should simply choose the best content for their subscribers. Flextech, which Telewest believes could be worth £1bn, is seen as a key player in the rapidly developing UK digital television market.

Both Channel 4 and five would be interested in buying Flextech to boost their "footprint" in digital households, which have a choice of dozens or even hundreds of channels.

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