Virgin Media receives buyout offer

Virgin Media Inc. received a buyout offer worth as much as $11.35 billion, people familiar with the deal said Monday, sending shares in the British telecommunications company to a one-year high.

But underscoring the delicate nature of the proposal, Virgin Media would not name its suitor and said the deal would be scrapped if it even disclosed the potential terms.

The offer of $30 to $35 a share was made by Carlyle Group, a Washington-based private equity firm, according to people who spoke only on the condition that they not be identified. Virgin also has about 6 billion pounds ($12 billion) of debt.

Virgin Media would say only that the offer came after it began a review with Goldman Sachs Group to explore “strategic alternatives,” including a possible sale.

Despite being formally based in New York and listed on Nasdaq, the company’s operations are in Britain.

Virgin Media added that “there is no assurance that any transaction will occur or, if so, at what price.” The company said it did not plan to comment further until a deal was reached or the offer was dropped.

Shares of Virgin Media jumped $4.30, or 18%, to $28.67.

The company, formed by the combination of cable operators NTL Inc. and Telewest Communications and mobile operator Virgin Mobile, reported its seventh consecutive quarterly loss in May after subscribers defected to rival satellite service BSkyB Ltd.

Thomas Eagan, a media analyst at Oppenheimer & Co., said going private could make Virgin Media more competitive.

The company wouldn’t have to publicly disclose its operating and financial figures, he said, and would be less constrained in terms of marketing, customer service and programming costs.

Other cable operators, such as Insight Communications Inc. and Cox Communications Inc. in the U.S., have gone private in recent years.

“Private equity has shown that it likes cable stocks,” Eagan said. “Here’s one that’s trading at a pretty low multiple versus U.S. cable stocks with a high cash flow yield compared to U.S. cable stocks.”

Virgin Media was formed to create Britain’s first “quadruple-play” service, offering mobile phone, fixed-line phone, Internet broadband and TV services. It has struggled, however, to provide solid services across all four platforms and recently invested substantially in revamping its customer service after scores of complaints.

Virgin Media stopped airing basic BSkyB channels, dropping popular American programs such as “Lost,” “24,” and “The Simpsons,” as the result of a battle over fees during negotiations to renew a distribution agreement.