Byline: By Steve Pain Deputy Business Editor
Cable operators Telewest and NTL have at last announced plans to merge in a deal theat creates the UK's second largest communications company.
The long-awaited $6 billion (pounds 3.4 billion) merger, which has been forecast in the City for many months, will bring about the largest provider of residential broadband services in the United Kingdom with 2.5 million subscribers.
The tie-up will be structured as a takeover of Telewest by NTL.
It ends months of speculation and will enable the enlarged company to compete more effectively with telecoms giant BT and satellite broadcaster BSkyB.
'This is a momentous day for the cable industry, with the creation of a new competitive force in the communications and entertainment industries in the UK,' said NTL chief executive Simon Duffy.
He said that as there is virtually no overlap between NTL and Telewest, the United Kingdom's competition authorities were unlikely stand in the way of the deal, which should close in the first quarter of 2006.
'There's not a single household that can be connected to the network through both companies, so there are no obvious competition issues,' he said.
Under the terms of the approved takeover, Telewest investors will receive $16.25 (pounds 9.23) in cash and 0.115 new stock in NTL for each share they own.
Telewest shareholders will be left with 25 per cent of the enlarged group following the transaction.
NTL said it would tap the corporate bond market for pounds 1.8 billion to fund the takeover, with a further pounds 500 million coming from its cash pile.
It added that the merger would result in total savings of pounds 1.5 billion after integration costs.
By reducing capital expenditure and other administrative burdens, NTL also expects an improvement in annual free cash flow of some pounds 250 million by 2009.
Due to complications stemming from both groups' financial restructuring in 2003, Mr Duffy said there were no plans to change the group's primary listing from New York. …