NTL ups offer for Virgin Mobile

NTL and Virgin Group are still in discussions

NTL has raised its takeover offer for Virgin Mobile to £961m ($1.7bn) in an effort to break the impasse over the proposed deal.

The two companies are in talks about the improved offer after Virgin Mobile rejected NTL's original £871m bid.

Sir Richard Branson, Virgin Mobile's main shareholder, has indicated that he would be prepared to receive both cash and NTL shares in a deal.

This could see him receiving less than minority shareholders.

Better offer

However, the revised deal has yet to be approved by Sir Richard's Virgin Group, which owns 71% of Virgin Mobile, minority investors or Virgin Mobile's board.

But it is thought Sir Richard might be willing to accept the restructured offer in order to break the logjam in discussions.

I don't think it is a complete slam dunk Robert Grindle, Kleinwort Wasserstein

Under a restructured offer, he could accept 67p a share in cash, in addition to NTL shares, while other shareholders could receive 372p a share in cash only.

If that happened, he could receive about £42m less than other investors.

Virgin Mobile rejected NTL's 323p offer in December and it is thought that some minority investors are holding out for a 400p offer.

In the balance

The deal is also conditional on due diligence and the two companies agreeing a deal over use of the Virgin brand on NTL products.

This agreement could be worth up to £10m a year to the Virgin Group.

If concluded, the deal would create a media company capable of challenging BSkyB, the UK's dominant pay-TV provider.

But one analyst said he believed the deal was far from done.

"I don't think it is a complete slam dunk given the noises that one of the larger shareholders has been making," Robert Grindle, telecoms analyst at Kleinwort Wasserstein, told the Press Association.