Texas Pacific Backtracks on Virgin Media Deal

01 August 2007

LONDON: Sight of Virgin Media's current business model has reportedly doused the ardour of global private equity firm Texas Pacific Group, which on Tuesday quit the $23 billion (€16.81bn; £11.36bn) auction to acquire the loss-making cable group

However, another factor - the current upheaval in the US subprime and financing markets - almost certainly hastened TPG's exit, despite its claim to have over $30bn of capital under management.

The teetering US subprime lending market is causing Richter scale tremors across the financial world as private equity firms scurry to secure their debts.

Some onlookers believe this formerly aggressive sector of the global investment casino will for the next year or two adopt a profile lower than that of a sidewinder.

It is this scenario that probably triggered the intervention of Liberty Media chairman John C Malone, owner of the second most sensitive deal-detecting antenna in the media world.

His local arm Liberty Europe, entered the Virgin fray on Monday - and in the current climate of retrenchment Malone will have few rivals for his target's not-so-fair hand.

Time Warner, for one, has declared its apathy. Said a terse spokesman: "Rumours of Time Warner's interest are unfounded."

However, Carlyle Group's attraction to Virgin appears undiminished, despite playing a waiting game. It insists it has factored-into its bid a possible downturn in world credit markets. And it is said to be willing to wait as long as it takes to secure a deal.

Data sourced from The Times (UK); additional content by WARC staff