Sold out

London, April 4 (Reuters): UK cable company NTL has agreed to buy Virgin Mobile in a deal that could be worth up to ?984.9 million ($1.7 billion), creating a ‘quadruple-play’ mobile, fixed-line, broadband and TV service under the Virgin brand.

Billionaire entrepreneur Richard Branson, whose Virgin Group owns 71.2 per cent of Virgin Mobile, has agreed to receive a mix of cash and NTL stock worth 378p per share for his stake, plus a license fee for the Virgin brand worth about ?9 million a year.

Virgin Mobile’s minority investors will be able to exchange each of their shares for either 372p in cash, 0.23245 NTL shares valued at 389p, or the same mix of cash and shares as Branson, NTL said on Tuesday.

The total price of the deal, which values Virgin Mobile’s share capital at ?962.4 million, could range from ?972.2 million to ?984.9 million, depending on which option the minority shareholders choose.

“This deal has taken a long time to come through. Considering Virgin Mobile’s board has backed it, the minorities should have no problem accepting it,” said Damien Chew, analyst at ING Financial Markets.

Branson will be the largest shareholder in the combined company with a stake of about 10 per cent, and he will have a representative on the NTL board.

The new company will be rebranded with the Virgin name within the next 12 months, NTL Chief Executive Steve Burch said. NTL only recently completed its merger with smaller cable rival Telewest.

“My first priority is the integration of Telewest and NTL. Virgin Mobile is going to stay quite independent for the next year,” he said in a conference call with reporters.

“We’re going to start cross-selling and upselling, but we’re not going to get too involved in the (Virgin Mobile) integration until next year.”