British cable operator NTL has agreed a long-awaited deal to buy smaller rival Telewest for $6 billion in a move to compete more effectively with the likes of BSkyB and BT.
NTL said on Monday it is paying $23.93 - $16.25 in cash and 0.115 NTL shares - for each Telewest share, confirming a weekend Reuters report on the deal. It is also taking on 1.7 billion pounds ($3 billion) of Telewest debt.
NTL and Telewest, both of which are listed on the US Nasdaq market, have customers in about 5 million UK households, compared with nearly 8 million for BSkyB. The company will also be Britain's second-largest residential telephone company behind BT Group.
NTL Chief Executive Simon Duffy said the deal would allow the combined company to cut 1.5 billion pounds in costs, accelerate the launch of products such as video on demand, and mount an aggressive advertising campaign to win new subscribers for its "triple-play" offering of voice, TV and Internet.
He also signalled that NTL would keep Telewest's Flextech content division, which includes channels such as Living TV and UKTV. Telewest had put up Flextech up for sale prior to Monday's announcement.
Content channels are highly sought after due to the growing popularity of free-to-air television platforms such as Freeview, which recently surpassed cable in terms of UK households.
Under the terms of the deal, Telewest acting CEO Barry Elson will leave the company after the deal closes. NTL shareholders will own about 75 percent of the new company and Telewest shareholders 25 percent.
Comments
Comments are closed.