NTL chief to step aside in middle of M&A battle

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NTL yesterday said that Simon Duffy, chief executive, would be stepping down to the role of executive vice-chairman as it appointed a new chief executive from Comcast, the US cable company.

The appointment of Stephen Burch, head of Comcast’s Atlantic division, will surprise investors as it comes as NTL is in the middle of two transactions which will transform the company.

Last week, it announced an £817m bid for Sir Richard Branson’s Virgin Mobile group, which still faces opposition from minority shareholders who object to the price offered.

Its efforts to complete a merger with its only UK cable rival, Telewest, have also been complicated by the need to avoid triggering a change of control clause in Telewest’s programming joint venture with the BBC.

NTL confirmed yesterday that it would reverse the original transaction so that Telewest will buy NTL. Each share of Telewest stock will be converted into 0.2875 shares of new Telewest stock and one share of Telewest redeemable stock, which will convert to $16.25 in cash at the time of the merger.

The terms mean Telewest’s shareholders will receive the same value for their shares as under the previous NTL takeover plan.

Investors may welcome the arrival of an executive with a strong operational reputation, however, to oversee the complex integration of the two proposed deals and to counter the cable companies’ poor reputation for customer service.

Mr Burch has spent 17 years with Comcast, five of them in charge of all operations in its Atlantic division, where he oversaw Comcast’s integration of AT&T Broadband.

Mr Duffy’s new role will largely be focused on external affairs for NTL in the UK. He will take charge of mergers and acquisitions, strategy, regulatory and content matters

One analyst said that bringing in Burch, a 26-year cable industry veteran who helped to integrate AT&T Broadband after it was purchased by Comcast, would help NTL with the difficult task of managing one and perhaps two transformative acquisitions.

“The bolstered management team bodes well for the success of the combined company,” said UBS analyst Aryeh Bourkoff. “We do not expect this announcement to affect current Virgin Mobile negotiations or private equity interest in the company.”

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