ITV shares jump on news of NTL talks
EmptyLONDON -- Shares in ITV jumped 8% to £ 1.14 ($2.17) in early trading Thursday after the U.K. broadcaster confirmed that it was in "very preliminary" merger talks with cable operator NTL.
ITV said it has received a "highly tentative" preliminary approach from NTL but played down the significance of the talks, saying that the cable giant has yet to table a firm offer.
"The board of ITV has indicated its willingness to listen to any bona fide proposal, but to date no meeting has been held nor has any proposal been received," the broadcaster said in a statement to the London Stock Exchange. "Accordingly, there can be no certainty that any compelling construct will be forthcoming, still less that any merger or takeover will result."
Nasdaq-listed NTL said it has scheduled an initial conversation with ITV but that the process was at a very preliminary stage and there was no assurance that discussions will lead to any offer being made for ITV.
ITV's share price has been rising steadily over the past few weeks amid speculation that it was in talks over a potential bid.
But analysts have poured cold water on the notion of a deal between ITV and the loss-making cable operator. NTL reported Wednesday that losses had almost doubled to £ 96 million ($183 million) and said 58,000 customers over the quarter had quit its services.
NTL has yet to fully consolidate the acquisition of rival cable operator Telewest and is in the process of digesting mobile phone operator Virgin Mobile. ITV's free-to-air business strategy also is at odds with NTL's subscription model.
"We therefore see a possible offer for ITV in the near term as a very high-risk strategy given the execution risks involved and remain skeptical about the prospects of this," brokerage firm Cazenove said in a research note.