Carlyle plots $22bn Virgin Media bid

The Carlyle Group is preparing a $22 billion takeover bid for UK cable TV and mobile phone business Virgin Media, as it looks to replicate the success of its previous European investments in the sector.

US buyout firm The Carlyle Group is preparing a $22 billion (€16 billion) take-private bid for Virgin Media, a Nasdaq-listed UK cable company that rejected an offer from a private equity consortium last year.

A banking source confirmed that Carlyle is preparing a bid of somewhere between $30 and $32 (€22 and €24) per share, which would give the deal a total value – including Virgin Media’s $12 billion of debt – of about $22 billion.

Any deal at this price would be the second biggest buyout of a UK business to date, just behind KKR’s £12 billion takeover of health and beauty chain Alliance Boots this year.

A consortium of private equity firms comprising Providence Equity Partners, KKR, Cinven and The Blackstone Group attempted to take Virgin Media private for £10 billion in 2006 but was thwarted by hedge fund tycoon and shareholder Bill Huff.

However, it was reported in May that this consortium was preparing another bid for Virgin Media. Huff has since decreased his stake in the business and is no longer considered an obstacle to a potential takeover.

Carlyle’s bid of between $30 and $32 per share values Virgin Media’s shares at between £4.9 billion and £5.2 billion. It would also represent a sizeable premium to Virgin Media’s closing share price on Friday of $24.37.

Virgin Media hired Goldman Sachs to conduct an auction in May. The business, which was created from the merger of Virgin Mobile and UK cable operators NTL and Telewest in 2005 and 2006, has been struggling from customer losses and an ongoing dispute with pay-TV business BSkyB.

Carlyle’s previous investments in the cable sector, which has become a popular hunting ground for private equity deals, include Dutch cable operator Casema, which was sold to Warburg Pincus and Cinven in July 2006 for €2.1 billion ($2.9 billion), and Sweden’s biggest cable business Com Hem, which the firm bought in December 2005.