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Sir Richard Branson is prepared to do a deal with NTL that values his 72 per stake in Virgin Mobile at a significant discount to the price offered to minority shareholders.
Prior to last week’s offer of 323p to minority shareholders, which was rejected by the Virgin Mobile board, the billionaire entrepreneur had been willing to accept an offer of 300p a share, according to people close to Sir Richard.
The disclosure comes as Sir Richard is facing pressure to accept a lower price for his shares in order to make more money available to minority shareholders.
People familiar with the situation said Sir Richard had already offered to take a reduced amount for his stake in order to see the formation of a “quadruple play” media company that could offer television, broadband, fixed line and mobile telephony.
His willingness to accept a lower offer partly reflects the lucrative royalty payments that Virgin Group will receive from NTL for use of the Virgin Mobile name.
Indeed, sources have suggested Sir Richard could seek to increase the licence fee payments from NTL for use of the Virgin brand. This could allow Sir Richard to receive less for his stake, potentially allowing NTL to increase its offer for minority shareholders, without increasing its overall bid valuation for Virgin Mobile.
NTL was expected to agree to a royalty rate similar to the agreement between Virgin Mobile and the Virgin Group, at 0.25 per cent of revenue. However, people familiar with the situation said Sir Richard’s willingness to accept less than minority shareholders was indicative of his eagerness to strike the deal.
Minority shareholders in Virgin Mobile are continuing to hold out for more than NTL’s offer at 323p, with the Virgin Mobile board saying last week that the 323p offer “materially undervalued” the company.
Virgin Mobile shares closed on Friday at 355p, giving the company a market capitalisation of more than £917m. Virgin Mobile and NTL both declined to comment.
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