The battle for Virgin Media intensified last night as Providence, the American buyout firm, instructed advisers to prepare an offer for the $22 billion (£11 billion) television and broadband group.
Providence is understood to have joined with KKR, the new Boots owner; Blackstone and Cinven to enter the auction for the cable operator. Other private equity groups are understood to be considering joining the fray.
Virgin Media confirmed last week that it had received an approach from Carlyle, whose $33 to $34-a-share offer values the company at $23 billion including its £6 billion of debt.
Rivals insist that their offers will not top that price. Factors including the volatility in the debt markets would give bidders ammunition for ruling out a higher offer, they said. However, sources dismissed those claims as an attempt to talk down the price.
Carlyle, which declined to comment, is unlikely to welcome the competition. The group had sought to secure a period of exclusivity with Virgin.
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It is thought to have felt that its offer put a full value on the cable group, which has struggled to fulfil its aim of becoming a formidable player in the home communications market.
However, Virgin’s confidence about securing interest elsewhere has led it to insist on a formal auction run by its advisers, UBS and Goldman Sachs.
They are seeking to increase the competitive tension by drumming up interest from US cable giants such as Comcast and Time Warner Cable.
Interested companies are to be invited in shortly for presentations from Virgin Media’s management with a deadline for first-round indicative offers set for some time in August.
It is understood that Carlyle has not yet had access to the Virgin figures and has received no formal acknowledgement of its offer beyond a brief meeting with management.
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However, the buyout house is thought to remain confident about its chances.
A Providence-led group first approached Virgin, which was then still called NTL, last year, with an offer of about $30 a share.
The group’s approach was thwarted by factors including opposition from Bill Huff, the New Jersey hedge-fund investor. The renewed interest in the Nasdaq-listed cable group has been triggered in part by the lessened influence of Mr Huff. who nows holds just 4.9 per cent of the cable group.
Carlyle is understood to be working alone, although it is open to leading a consortium. Interest from Apax, which had held talks with it about joining forces, is understood to be waning.
In an attempt to prevent groups of private equity operators joining forces at a later stage Virgin’s advisers are expected to lay down rigid nondisclosure clauses for participants.
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KKR, Blackstone and Cinven declined to comment.