London -- Telewest Communications plc said last week that
it made a formal bid to acquire General Cable, Britain's fourth-largest MSO, for $1.1
billion in stock and cash. The deal confirmed an initial agreement a month ago for
Telewest to acquire General.
One surprise element that surfaced last week, however, was
word that Telewest chief executive Stephen Davidson will leave the company when the deal
is closed. He will turn over the reins to David Van Valkenburg, MediaOne
International's chief operating officer, who is based in London. Van Valkenburg, a
U.S. cable-industry veteran, was brought to London by MediaOne International, a 27
percent-shareholder in Telewest, to try to help turn the flagging U.K. cable operation
around. He was instrumental in a deep cost-cutting effort that was put into place at
Telewest last year.
Telewest's April 15 announcement confirmed that its
stock-and-cash bid calls for Telewest to pay 1.243 of its shares, plus 65 pence ($1.07) in
cash, for each General share. The cash component is worth $400 million. Telewest intends
to finance the purchase with a 259 million-share issue, underwritten by its main
shareholders at 92.5p ($1.52) per share. Tele-Communications International Inc. (TINTA),
like MediaOne, owns 27 percent of Telewest, while SBC Communications Inc. and Cox
Communications Inc. each own 10 percent stakes.
Separately, Telewest confirmed that it intends to trigger
options to spend about $336 million to buy Comcast U.K. Cable Partners Ltd.'s 27.5
percent stake in Birmingham Cable and its 50 percent stake in Cable London, giving it
control of those franchises. Those assets had been coveted by NTL U.K. Ltd., the MSO that
is taking over Comcast and that expected to acquire those stakes in its deal.
If Telewest successfully closes both the General and
Comcast franchise acquisitions, it will become the U.K.'s No. 1 MSO, surpassing Cable
& Wireless Communications.