Telewest set for pounds 9.2bn Flextech takeover

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The Independent Online
TELEWEST, BRITAIN'S number two cable company, and Flextech, the thematic TV channels group, are expected to unveil this morning an all- share merger valuing the combined group at about pounds 9.2bn.

Barring a last-minute breakdown, Adam Singer, the chief executive of Flextech, will become chief executive of the enlarged group. Tony Issley, the current chief executive of Telewest, will accept another position.

Flextech shareholders are expected to be offered new Telewest stock valuing Flextech at pounds 1.9bn - similar to the value of the company at the close of trading yesterday.

Flextech and Telewest were among the heaviest losers on the stock exchange yesterday. Telewest ended down 28.75p at 313.25p, a loss of 8.4 per cent, while Flextech slid 142.5p, or 10.5 per cent, at 1210p.

Mr Singer's promotion will mark a return to the cable group where he earlier served as a non-executive director. Prior to joining Flextech as executive chairman, Mr Singer was president of the international arm of Tele-Communications Inc. (TCI), the US cable giant that, with US West, co-founded Telewest in the early 1990s.

The merger will vertically integrate Telewest's broadband cable network, which passes more than 4 million British homes, with Flextech's portfolio of thematic television channels. In addition to basic cable channels, such as Living, Flextech is co-partner with the BBC in the development of pay-TV channels, and produces various websites and interactive channels.

Through Liberty Media, now the media content arm of AT&T, the TCI founder John Malone oversees a 37 per cent stake in Flextech and a 21.6 per cent stake in Telewest. The merger will see Liberty's stake in the enlarged group rise to around 30 per cent, putting Mr Malone on an equal footing with Bill Gates, the chairman of Microsoft, which owns a 29.9 per cent interest in Telewest.

The merger also highlights Telewest's growing concentration on building interactive television and e-commerce services. It has recently formed partnerships with Abbey National and others to offer digital TV subscribers access to financial transactions and other services.