Virgin Tells Its Suitors To Wait8/10/2007 8:00 PM Eastern
Virgin Media reported weaker-than-expected quarterly results last week, but maintained a bullish tone on its conference call with analysts, telling investors it will put its planned auction on hold while it focuses on improving operations.
Virgin, the largest cable operator in the United Kingdom, has been in play since early July, when private-equity giant The Carlyle Group lobbed a $23 billion unsolicited offer to buy the company. While other suitors like Liberty Media, Comcast and Providence Equity Partners were expected to join the fray, Virgin said it was putting the process on hold in light of the downturn in the credit markets.
“To enhance shareholder value, Virgin Media's financial advisors have recommended that Virgin Media extend the process until these parties can complete their proposals in a more stable debt market environment,” the company said in a statement.
While subscriber metrics missed most analyst estimates, the company said it expects more robust growth in the second half of the year.
That prompted Oppenheimer media analyst Tom Eagan to maintain his “buy” rating on the stock. Eagan noted that Virgin outpaced many of his financial estimates.
Eagan also believes that when the credit crunch — spurred by a huge decline in the subprime lending market — subsides, financial players will line up for Virgin's strong U.K. media assets.
“Although the auction process has stalled, we expect private equity interest is real and may provide a support for the stock,” Eagan wrote.