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$12B bid for U.K. cable firm
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July 15, 1999: 9:31 a.m. ET
NTL, France Telecom to launch offer for Cable & Wireless unit
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LONDON (CNNfn) - U.K. cable operator NTL has teamed up with France Telecom to prepare an 8 billion pound ($12.6 billion) bid for the principal assets of rival Cable & Wireless Communications, the French company confirmed Thursday.
France Telecom will provide the financial firepower for heavily indebted NTL (NTLI), a Nasdaq-listed company with most of its business in Britain, to buy CWC's residential cable assets.
An offer could be announced next week, according to the Financial Times, possibly derailing ongoing negotiations between CWC (CWZ), which is majority-owned by Cable & Wireless (CW.), and cable rival Telewest (TWT). They have been in talks since April.
France Telecom issued a statement confirming it's in talks to take a stake in NTL "in order to facilitate the consolidation of the U.K. cable operators market." NTL said that it would cancel a planned share offering if talks result in an investment by France Telecom.
CWC confirmed it had been in talks with NTL "and other parties."
Most of the stocks involved received a boost from the news, with CWC jumping almost 4 percent to 722 pence and Telewest rising 2 percent to 291 pence. France Telecom shares dipped almost 1 percent in Paris to 72.35 euros.
Telewest and CWC told CNNfn.com they had nothing to add to previous confirmation that they are in merger talks.
Cable & Wireless would keep Mercury, a long-distance operator that is part of CWC, as part of the parent company's desire to concentrate on business telecom services.
A deal would be one of the last acts in the consolidation of the U.K. cable industry, which now has only three major participants, down from more than a dozen. There's more to come, analysts say. "There will be only one (U.K. cable) company," according to Saeed Baradar, telecom analyst at Morgan Stanley in London.
Prospects for the industry have improved as consolidation has brought improved finances and greater buying power. The arrival of digital cable TV, with prospects for high-speed Internet access and interactive services has brought a further, much-needed boost to the industry.
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