11 March, 2010 |

Telewest, Flextech Move Closer Together

Having revealed last week that the two companies were in exploratory discussions, Telewest Communications and Flextech said Friday that a merger of their companies was now likely.

Television and new media group Flextech supplies thematic channels to the UK multichannel TV market. Telewest is a major player in the cable industry and earlier this week announced that it will introduce unmetered Internet access to the UK in February.

Together, the two companies are expected to be a powerful force, capable of delivering interactive and transactional services across multiple platforms in the UK market.

The deal being envisaged is an offer by Telewest for Flextech's outstanding ordinary shares, exchanging 3.78 new Telewest shares for every Flextech share.

With Telewest's shares standing at 340 pence (Thursday's price), the deal would place a value on Flextech of around £2 billion ($3.2 billion).

After the merger, if the above terms are agreed, Telewest shareholders will own around 80 per cent and Flextech shareholders 20 per cent of the enlarged Telewest group.

The talks are clearly at an advanced stage, as the board of the new company has already been announced, with Adam Singer as CEO, Cob Stenham as independent non-executive chairman, and Tony Illsley and Brent Harman serving as group managing director and managing director of content and new media respectively.

Microsoft and MediaOne together hold approximately 29.7 per cent of Telewest's issued share capital, and both companies are said to be in favour of the merger.

Liberty Media International holds 36.6 per cent of Flextech's issued share capital and has also agreed the terms of the offer.

A further announcement will be made at the end of January. In the meantime, Flextech has undertaken not to solicit alternative offers.

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