Ntl (NASDAQ:NTLI)
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NTL Incorporated (NASDAQ: NTLI) ("ntl") and the
Independent Board of Virgin Mobile Holdings (UK) plc ("Virgin Mobile")
are pleased to announce that they have reached agreement on the terms
of a cash offer, with a share alternative offer and a cash and share
alternative offer, to be made by ntl and one of its wholly owned
subsidiaries to acquire the entire share capital of Virgin Mobile (the
"Offer"). Full details of the Offer are detailed in an announcement
made today in the United Kingdom under Rule 2.5 of the U.K. Takeover
Code.
Under the Offer, Virgin Mobile Shareholders can elect for:
(1) 372 pence in cash for each Virgin Mobile share; or
(2) the share alternative of 0.23245 shares of ntl common stock
for each Virgin Mobile share, valued at 389p per share based
on the closing price of ntl's common stock and the $/GBP
exchange rate at 3 April 2006; or
(3) the share and cash alternative of 0.18596 shares of ntl common
stock, valued at 311p per Virgin Mobile share based on the
closing price of ntl's common stock and the $/GBP exchange
rate at 3 April 2006, plus 67 pence in cash, for each Virgin
Mobile share.
The Cash Offer values Virgin Mobile at approximately GBP 962.4
million.
Virgin Group Investments Limited ("Virgin Group"), which
beneficially owns approximately 71.2 per cent. of Virgin Mobile's
shares, and Virgin Entertainment Investments Holdings Limited ("Virgin
Entertainment") have irrevocably undertaken, irrespective of whether
any higher competing bid is made, to elect in full for the share and
cash alternative. Other Virgin Mobile shareholders, who hold an
additional 0.82 per cent. of Virgin Mobile's shares, have also
irrevocably undertaken to accept the Offer.
Virgin Mobile is the UK's leading mobile virtual network operator
with 4.3 million customers. Virgin Mobile uses the T-Mobile network
for the transmission of its traffic. For the last twelve months ended
September 30, 2005, Virgin Mobile had total revenues, under IFRS, of
GBP 539 million. Virgin Mobile does not operate outside of the United
Kingdom, and does not own Virgin Mobile in the United States or in
other countries.
ntl is also entering into a long-term exclusive license agreement
with Virgin Enterprises Limited under which its existing license to
use certain Virgin trade marks within the United Kingdom and Ireland
in respect of its internet business will be extended to television,
fixed line telephony and, upon completion of the acquisition of Virgin
Mobile, mobile telephony, as well as the acquisition and branding of
sports, movies and other premium television content and the branding
and sale of certain communications equipment, such as set top boxes
and cable modems. The agreement will provide for an annual royalty of
0.25% of relevant consumer revenues, subject to a minimum annual
royalty of GBP 8.5 million (the royalty would have been approximately
GBP 9 million based on 2005 revenues including Virgin Mobile and
Virgin.Net). ntl will also have the right to adopt a corporate name
that includes the Virgin name. In connection with the agreement,
Virgin Enterprises will have the right to propose a candidate to serve
as a director of ntl, and it will also have the right to nominate a
senior marketing executive as an ntl employee. Pursuant to the U.K.
Takeover Code, the license agreement is subject to approval by a
majority of the Virgin Mobile shareholders who are not affiliated with
the Virgin Group. ntl expects to commence the proposed re-branding
within 12 months of the license agreement becoming unconditional.
Closely following the merger of ntl and Telewest to create the
UK's leading triple-play provider, ntl's combination with Virgin
Mobile and the proposed re-branding of its combined consumer
businesses with the Virgin brand represents an important milestone in
ntl's history. ntl believes the combination and re-branding of its
combined consumer operations will deliver wide-ranging strategic and
financial benefits to shareholders. In particular, ntl believes that
the combination with Virgin Mobile and the re-branding of the combined
consumer operations with the Virgin brand will:
-- help transform it from the UK's leading triple-play cable
provider into a national entertainment and communications
company, harnessing the powerful Virgin consumer champion
brand
-- enhance ntl as a scale competitor in the UK, enabling ntl to
compete more effectively with the large incumbents in the UK
telecommunications market. In addition, the extension of ntl's
product suite to include mobility will, ntl believes, provide
a strong platform for innovation and development of innovation
converged products, such as converged fixed and mobile
telephony devices, and video and voice services
-- appeal to existing and new consumers by offering a wide range
of high quality communications services from a single
provider, with the unique flavour and customer focus of the
Virgin brand
-- allow it to extend its expertise in bundling and cross-selling
communications products to mobile telephony
-- provide potential for revenue synergies:
-0-
*T
-- increasing penetration and reducing customer churn by
providing an appealing product suite under the Virgin
brand
-- increasing average revenue per user through the effective
cross-selling of mobile services into customer homes
serviced by ntl, and triple-play services to Virgin Mobile
subscribers
*T
-- not materially affect ntl's current leverage. Other potential
benefits anticipated include savings on some of the
re-branding costs it may have incurred had it rebranded under
a newly created brand, and the use of certain existing capital
allowances to offset Virgin Mobile taxable income
Virgin Mobile will retain its existing brand and will continue to
be based in the UK. Virgin Mobile's operating business will continue
to be led by members of Virgin Mobile's current management team, and
it is intended that a marketing director from Virgin will join ntl,
bringing Virgin's brand expertise to the ntl management team.
The Offer will be implemented through a U.K. Scheme of
Arrangement. After receiving court approval to hold a shareholder
meeting, Virgin Mobile shareholders will be asked at a meeting of
shareholders to approve the Scheme of Arrangement. The court will then
be asked to confirm the fairness of the Scheme. The Scheme will be
structured so that the ntl shares issued in the Scheme will be exempt
from registration under the U.S. Securities Act of 1933, as amended.
Completion of the Scheme is expected in late June 2006. The Offer is
subject to competition authority approval in the United Kingdom and is
also subject to the shareholder vote described above relating to the
license agreement. The Offer is not subject to approval by ntl
shareholders.
ntl will finance the cash portion of the Offer (approximately GBP
414 million, assuming that all of the shareholders other than those
affiliated with the Virgin Group take cash), the refinancing of Virgin
Mobile's outstanding indebtedness (approximately GBP 193 million as at
September 30, 2005) and transactional expenses through GBP 475 million
of additional bank borrowings committed under its existing facility
and cash on hand.
The Independent Board of Virgin Mobile, who have been so advised
by Morgan Stanley & Co. Limited, consider the terms of the Offer to be
fair and reasonable. In providing advice to the Independent Board,
Morgan Stanley & Co. Limited has taken into account the commercial
assessments of the Independent Board. The Independent Board of Virgin
Mobile has indicated to ntl that it intends unanimously to recommend
that the Virgin Mobile shareholders vote in favor of the Scheme at the
appropriate meetings, as the Independent Directors have undertaken to
do in respect of all their own beneficial holdings of Virgin Mobile
shares. Virgin Mobile shareholders considering making an election for
the share alternative or for the share and cash alternative are
referred to the investment considerations that will be set out in the
Scheme document. The decision as to whether Virgin Mobile shareholders
make an election for the share alternative or for the share and cash
alternative will depend on their individual circumstances. If Virgin
Mobile shareholders are in any doubt as to the action they should
take, they should seek their own financial advice from an independent
financial advisor.
The affiliates of Virgin Group who will receive ntl stock in the
share and cash offer have agreed to: (a) limit (with the restriction
relaxing on a staged basis) the disposition of their ntl shares over
18 months; and (b) certain limitations on their conduct as ntl
shareholders. They have also received certain registration rights
under the U.S. securities laws.
Commenting on the Offer, James Mooney, Executive Chairman of ntl,
said:
"We are delighted to announce the recommended Offer and the brand
licensing with Virgin today, which not only delivers mobile capability
to our product bundle but also gives us access to a leading consumer
brand. It truly is a step-change transaction not only for ntl but for
the media sector as a whole in the UK.
Central to today's announcement is our strong belief that offering
a quad-play underpins true media convergence, and offering high
quality communications services will, we believe, appeal to existing
subscribers of the enlarged business as well as new customers. There
is a natural appeal for mobile, telephony, broadband and television
content and ntl is now truly unique in its mass market product
offering."
Commenting on the Offer, Charles Gurassa, Chairman of Virgin
Mobile, said:
"After careful consideration, the Independent Directors of Virgin
Mobile intend to recommend ntl's Offer to shareholders. This Offer
reflects the strong operational and financial performance of Virgin
Mobile and represents an excellent opportunity for Virgin Mobile
shareholders to realise the significant increase in shareholder value
since flotation. We believe this Offer is in the best interests of
Virgin Mobile's shareholders, customers and employees."
Goldman Sachs & Co. acted as financial advisor to ntl, and
provided a fairness opinion as to the consideration in the Offer to
the ntl board. Morgan Stanley & Co. Limited acted as financial advisor
to Virgin Mobile. Fried Frank Harris Shriver & Jacobson LLP and
Ashurst acted as counsel to ntl. Allen & Overy LLP acted as counsel to
the Independent Board of Virgin Mobile. Herbert Smith LLP acted as
counsel to Virgin Group Investments Limited.
A conference call and webcast for analysts and investors regarding
the Offer will be held today at 2 p.m. UK time/ 9 a.m. Eastern
Standard Time (UK: +44 20 7365 8426, US: +1 617 597 5341, participant
code: ntl). The presentation can also be accessed live via webcast on
ntl's website, www.ntl.com/investors. The teleconference replay will
be available for one week beginning approximately two hours after the
end of the call and will be available until Tuesday, 11 April 2006.
The dial-in replay number for the US is: +1 617 801 6888 and the
international dial-in replay number is: +44 (0) 207 365 8427, pass
code: 98450630.
Goldman Sachs International, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively for ntl and the Cash Offeror and no one else in connection
with the Offer and will not be responsible to anyone other than ntl
and the Cash Offeror for providing the protections afforded to its
customers or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Morgan Stanley & Co. Limited is acting exclusively for Virgin
Mobile and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
Investec Bank (UK) Limited is acting exclusively for Virgin Mobile
and no one else in connection with the Offer and will not be
responsible to anyone other than Virgin Mobile for providing the
protections afforded to its clients or for providing advice in
relation to the Offer or any matter or arrangement referred to herein.
JP Morgan Cazenove is acting exclusively for Virgin Mobile and no
one else in connection with the Offer and will not be responsible to
anyone other than Virgin Mobile for providing the protections afforded
to its clients or for providing advice in relation to the Offer or any
matter or arrangement referred to herein.
Further Information on the Offer
The availability of the Offer to Virgin Mobile Shareholders who
are not resident in the United Kingdom and the United States may be
affected by the laws of relevant jurisdictions. Virgin Mobile
Shareholders who are not resident in the United Kingdom or the United
States will need to inform themselves about and observe any applicable
requirements.
Any securities that are offered pursuant to the Offer described in
this announcement have not been and will not be registered under the
applicable securities laws of Australia, Canada or Japan. Accordingly,
any such securities may not be offered, sold or delivered, directly or
indirectly, in or into Australia, Canada or Japan except pursuant to
exemptions from applicable requirements of such jurisdictions.
The Offer will be subject to the applicable rules and regulations
of the UKLA, the London Stock Exchange and the City Code. In addition,
the Offer will be subject to the applicable requirements of the United
States federal and state securities laws and the applicable rules and
regulations of NASDAQ (except to the extent exempt from such
requirements).
Virgin Mobile Shareholders should read any prospectus that may be
filed by ntl with the SEC, because any such prospectus will contain
important information. Investors may obtain a free copy of any
prospectus, if and when it becomes available, and other documents
filed by ntl with the SEC, at the SEC's website at http://www.sec.gov.
Free copies of any prospectus, if and when it becomes available, may
be obtained by directing a request to ntl Incorporated, 9098 Third
Avenue, Suite 2863, New York, New York 10022, Attention: Investor
Relations. If the Offer proceeds by way of scheme of arrangement,
however, it is anticipated that no prospectus would be required
because the transaction would be exempt from registration under the US
Securities Act of 1933, as amended, pursuant to section 3(a)(10)
thereof, in which case this fact will be disclosed in the scheme
document sent to all Virgin Mobile Shareholders.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, or the solicitation of any
vote or approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of such jurisdiction.
City Code
Under the provisions of Rule 8.3 of the City Code, if any person
is, or becomes, "interested" (directly or indirectly) in 1 per cent.
or more of any class of "relevant securities" of ntl, the Cash Offeror
or of Virgin Mobile, all "dealings" in any "relevant securities" of
that company (including by means of an option in respect of, or a
derivative referenced to, any such "relevant securities") must be
publicly disclosed by no later than 3.30 p.m. (London time) on the
Business Day following the date of the relevant transaction. This
requirement will continue until the date on which the Offer becomes,
or is declared, unconditional as to acceptances, lapses or is
otherwise withdrawn or on which the "offer period" otherwise ends. If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an "interest" in
"relevant securities" of ntl, the Cash Offeror or Virgin Mobile, they
will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in
"relevant securities" of ntl, the Cash Offeror or of Virgin Mobile by
ntl, the Cash Offeror or Virgin Mobile, or by any of their respective
"associates", must be disclosed by no later than 12.00 noon (London
time) on the Business Day following the date of the relevant
transaction. A disclosure table, giving details of the companies in
whose "relevant securities" "dealings" should be disclosed, and the
number of such securities in issue, can be found on the Panel's
website at www.thetakeoverpanel.org.uk. "Interests in securities"
arise, in summary, when a person has long economic exposure, whether
conditional or absolute, to changes in price of securities. In
particular, a person will be treated as having an "interest" by virtue
of the ownership or control of securities, or by virtue of any option
in respect of, or derivative referenced to, securities. Terms in
quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not
you are required to disclose a "dealing" under Rule 8, you should
consult the Panel.
Forward Looking Statements
Certain statements in this document regarding the proposed
transaction between ntl and Virgin Mobile, the expected timetable for
completing the transaction, future financial and operating results,
benefits and synergies of the transaction, future opportunities for
the combined company and products and any other statements regarding
Virgin Mobile's or ntl's future expectations, beliefs, goals or
prospects constitute forward-looking statements as that term is
defined in the U.S. Private Securities Litigation Reform Act of 1995.
When used in this document, the words "believe", "anticipate",
"should", "intend", "plan", "will", "expects", "estimates",
"projects", "positioned", "strategy", and similar expressions or
statements that are not historical facts, in each case as they relate
to ntl and Virgin Mobile, the management of either such company or the
proposed transaction, are intended to identify those expressions or
statements as forward-looking statements. In addition to the risks and
uncertainties noted in this document, there are certain factors, risks
and uncertainties that could cause actual results to differ materially
from those anticipated by some of the statements made, many of which
are beyond the control of ntl and Virgin Mobile. These include: (1)
the failure to obtain and retain expected synergies from the
integration of legacy ntl and legacy Telewest Global and the proposed
transaction, (2) rates of success in executing, managing and
integrating key acquisitions, including the integration of legacy ntl
and legacy Telewest Global and the proposed acquisition, (3) the
ability to achieve business plans for the combined company, (4) the
ability to manage and maintain key customer relationships, (5) delays
in obtaining, or adverse conditions contained in, any regulatory or
third-party approvals in connection with the proposed acquisition, (6)
availability and cost of capital, (7) the ability to manage
regulatory, tax and legal matters, and to resolve pending matters
within current estimates, (8) other similar factors, and (9) the risk
factors summarized and explained in the 2005 Form 10-K for NTL
Holdings Inc. (fka NTL Incorporated). For additional information
concerning factors that could cause actual results to materially
differ from those projected herein, please refer to ntl and NTL
Holdings Inc.'s most recent Form 10-K, 10-Q and 8-K reports.