Virgin Media 2007 Annual Report Download - page 106
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VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Acquisitions (Continued)
We amortize the fair value of these assets on a straight-line basis over the remaining life of the
contracts of three years.
Reverse Acquisition of Telewest
On March 3, 2006, we merged with Telewest and the merger was accounted for as a reverse
acquisition of Telewest using the purchase method. This merger created the U.K.’s largest provider of
residential broadband and the U.K.’s leading provider of ‘‘triple-play’’ services. In connection with this
transaction, Telewest changed its name to NTL Incorporated, and has since changed its name to Virgin
Media Inc.
The total purchase price of £3.5 billion included cash of £2.3 billion, common stock valued at
£1.1 billion, stock options with a fair value of £29.8 million and direct transaction costs of £25.1 million.
The average market price per share of common stock utilized in determining the value of the new
common stock issued of £13.00 ($22.90) was based on an average of the closing prices of Telewest
common stock for a range of trading days (September 29, September 30, October 3, October 4 and
October 5, 2005) around the announcement date of the proposed merger (October 3, 2005). The cash
payment of £2.3 billion was based on the redemption value of $16.25 (£9.30) per share of Telewest
redeemable common stock issued in exchange for Telewest common stock in the transaction and
246.0 million shares of Telewest redeemable common stock so issued.
The outstanding options to purchase shares of our common stock were exchanged for options to
purchase shares of Virgin Media Inc. new common stock with the same terms and conditions.
The outstanding options to purchase shares of Telewest common stock were converted into options
to purchase shares of Virgin Media Inc. new common stock at an option price calculated in accordance
with the formula in the merger agreement. In accordance with the terms of Telewest’s equity-based
plans, a significant proportion of Telewest’s outstanding options that were granted prior to March 3,
2006 vested upon completion of the merger. All vested and unvested options of Telewest were recorded
at their fair value by using the Black-Scholes option pricing model.
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