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Friday, 17 December, 1999, 09:46 GMT
Telewest nears 2bn Flextech deal


UK cable company Telewest has confirmed that it plans to buy TV programmer Flextech for 2bn, creating a 10.5bn media giant.

The two companies said they are contemplating a recommended merger, following last week's announcement that they were in talks.

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Flextech provides 13 television channels, including Bravo and Living. Telewest has already said it will carry these channels on its new digital service which will reach 1.4m homes by the end of next year.

Under the proposal, Telewest shareholders would own 80% of the new group, while Flextech shareholders would own 20%.

The 2bn deal values each Flextech share at 1285.2 pence, with 3.78 Telewest shares being swapped for each Flextech share. In early trade, Flextech shares jumped 5 pence to 1,220 pence.

Flextech promises not to enter into merger talks with any other company before the end of January next year.

Flextech chief executive Adam Singer will retain his position in the new group while his Telewest counterpart Tony Ilsley will be managing director.

Legal hitches

Many had expected the two companies to announce a deal on Thursday.

The delay centred on legal wrangling over Microsoft's stake in Telewest, some reports said.

If Microsoft completes its planned purchase of Telewest, it will have a stake of 29.9% in the merged company and be its largest shareholder.

The US company is still awaiting European Union clearance for this purchase.

The two companies are also linked through Liberty Media, one of the largest US cable content providers, now partly owned by AT&T.

Liberty has 37% of Flextech, and 22% of Telewest.

Merger wave

Mergers have been sweeping the television industry, with Carlton planning an 8bn tie-up with ITV rival United News & Media, owners of Anglia and Meridian.

Cable TV companies NTL and Cable and Wireless also planned to merge, although that plan has been put on hold by a competition investigation.

That deal would have left Telewest, the other major UK cable TV company, out in the cold - prompting the current negotiations.

The emergence of many digital platforms - including the internet - which will be able to transmit a large number of channels has led to a convergence of the interests between media content providers and network operators

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See also:
07 Dec 99 |  Business
Telewest in talks with Flextech
27 Aug 99 |  The Company File
Telewest buys up Cable London
05 Aug 99 |  The Company File
Telewest high-speed Internet plan

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