Cable tie-up

3 October 2005 By Mike Verdin

NTL has finally got control of Telewest but at a price. It looks like the lion s share of the synergies are being paid to the target. But that won t worry NTL s biggest investors. Most of them were on both sides of the deal.

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NTL agreed to buy Telewest, the rival UK cable operator, for about $6bn. Including debt, NTL is paying $9bn.

NTL is paying $16.25 in cash and 0.115 in stock for every Telewest share. At closing prices on September 30, the deal values Telewest shares at $23.93.

The deal, which will create a company with 5m residential customers, will release synergies with a net present value of $2.7bn, net of the cost of achieving them.

This is a transforming transaction for the UK cable industry, Simon Duffy, NTL's chief executive, said.

The takeover will raise NTL's debt to $10.1bn, equivalent to 4.4 times forecast ebitda. The company aims to cut debt within about three years to between three and four times ebitda.

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