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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