Bidders in the £11 billion ($23 billion, €16 billion) Virgin Media auction are likely to hold back their bids until after the company’s results.
A banking source said: “Virgin Media chairman Jim Mooney has been to see interested parties. The 8 August, when results come out, has been interpreted as the first important date, although it is unlikely a bid will surface by then.” It is more likely people will indicate interest in the first two to three weeks of August and indicative offers will be tabled in September, he said
Problems in the debt market have made the majority of banks reluctant to underwrite any deal so buyout firms are experiencing difficulties finding leverage for a bid of this scale.
The Carlyle Group and a consortium of Providence Equity Partners, Kohlberg Kravis Roberts, Cinven, and The Blackstone Group are mulling bids according to a Virgin spokesperson.
A banker working on TPG’s intended bid said: “Any bid from TPG is highly unlikely but if the bid does go forward it will be in a consortium.”
Sir Richard Branson’s 10.1 percent stake could be rolled over to around 25 to 30 percent in any take-private bid in order to reduce the amount paid by any bidder, according to the UK newspaper Financial Times. It said Franklin Mutual Advisers, owned by Franklin Templeton, may also consider keeping its 9.3 percent stake.
Franklin Mutual Advisers originally sparked interest in Virgin Media in May by criticising the company’s strategic direction, corporate governance and management.
As well as paying an equity price of around £5 million the buyer would need to take on Virgin Media’s £6 billion of debt. As a result the deal is expected to have an enterprise value of about £11 billion.
Other bidders reportedly interested in the company include Viacom, Comcast, Time Warner and Apax Partners although none of these were confirmed by Virgin Media.