Will Virgin Media succumb to private equity?

published 6 July 2007

After years of courting Virgin Media (previously known as NTL), private equity looks to have its "best chance yet" of getting its hands on the company, said Mike Verdin of Breakingviews. The £11.5bn approach by Carlyle Group and other bidders may well emerge, triggering an auction may prove difficult for Virgin to resist.

Virgin Media: what the commentators said

This situation looks tailor-made for private equity, said Damian Reece in The Daily Telegraph. "Virgin Media is going through just about every sort of corporate agony a company can suffer." The group is weighed down with £6bn in debt, the share price is in the doldrums and it is about to embark on a very expensive legal dispute with BSkyB.

What Virgin Media does have in its favour, however, is an "enviable combination of assets for the converging world of entertainment and communication", said James Harding in The Times. This includes the so-called quadruple play of TV, mobile, fixed-line and broadband, as well as a pay-TV platform and a strong brand. Carlyle's strategy, then, may be to "make peace with Sky and allow the technological benefits of fibre-optic cable go to work over time", said Nils Pratley in The Guardian. Besides, "Branson has always said that he and public markets don't get on", said Reece. A successful deal, which would allow him to sell his 10.5% stake at a premium, would give him "an elegant exit" from a "messy business venture.