The private equity firm Carlyle Group is prepared to make an $8 billion (£4 billion) bid for cable company Virgin Media, according to British newspaper the Sunday Telegraph. The unsourced report claims the offer will likely begin an auction process, and Goldman Sachs is said to be preparing documents on the company's financial position to circulate among potential suitors. Sir Richard Branson's Virgin Group holds a 10.5% stake in Virgin Media, making him its biggest shareholder. The Telegraph reports that Providence Equity, which tried last summer as part of a consortium to buy Virgin Media for $10 billion, "is understood to have signaled its interest again." Virgin Media is the product of a merger between NTL and Telewest. The company's share price has dropped amid an ongoing battle with satellite operator BSkyB, which Virgin Media has sued over a fee dispute. In May, the company posted its seventh straight quarterly loss following subscriber defections after Virgin dropped five BSkyB channels. The Financial Times notes that Huff Asset Management, the shareholder believed to have blocked the Providence bid for Virgin Media, has reduced its stake from 6.7% to 4.9% and is no longer considered an obstacle to a buyout. UPDATE: Dow Jones reported early Monday that the Carlyle Group has made an offer of $33-35 per share for Virgin Media, valuing the company at approximately £11.5 billion including debt. An unnamed source told Dow Jones that Virgin Media has responded by asking Goldman Sachs to "effectively start to run an auction."
Sources: Telegraph, Dow Jones, MarketWatch, Reuters, New York Times, Financial Times
Commentary: Providence Equity Mulls $15 Billion Bid for Virgin Media -- The Observer • Virgin Media and Sky: Report From The Battlefield • Virgin Media: Good News All Around
Stocks/ETFs to watch: Virgin Media Inc. (VMED). Competitors: British Sky Broadcasting Group plc (BSY), BT Group plc (BT). ETFs: PowerShares Dynamic Media Portfolio ETF (PBS), PowerShares Dynamic Leisure & Entertainment (PEJ)
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