Virgin Media 2008 Annual Report Download - page 113

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4—Acquisitions
Acquisition of Virgin Mobile
On July 4, 2006, we acquired 100% of the outstanding shares and options of the U.K. operation of
Virgin Mobile through a U.K. Scheme of Arrangement. Virgin Mobile was the largest mobile virtual
network operator in the U.K. with approximately 4.5 million customers at the time of acquisition.
The total purchase price of £953.2 million included cash of £419.2 million, common stock valued at
£518.8 million and direct transaction costs of £15.2 million. The average market price per share of
common stock utilized in determining the value of new common stock issued of £15.07 ($26.59) was
based on an average of the closing prices of our common stock divided by the Telewest acquisition
conversion ratio of 2.5 times for a range of trading days (January 12, January 13, January 17,
January 18, January 19) around the announcement date of the proposed acquisition (January 16, 2006).
We financed the cash portion of the offer and transactional expenses through £475 million of
additional borrowings under our senior credit facility and cash on hand.
The total purchase price was allocated as follows (in millions):
Acquisition
Date
Cash and cash equivalents, including restricted cash ................ £ 14.1
Accounts receivable ....................................... 45.4
Prepaid expenses and other current assets ....................... 5.3
Fixed assets ............................................. 9.2
Inventory ............................................... 9.1
Amortizable intangible assets:
Customer lists .......................................... 280.0
Contractual relationships .................................. 6.0
Software and other intangible assets .......................... 9.3
Intangible assets with indefinite lives:
Goodwill .............................................. 971.7
Other assets, net .......................................... 1.4
Accounts payable ......................................... (47.2)
Long term debt, including current portion ....................... (200.0)
Other current liabilities ..................................... (103.6)
Other long term liabilities ................................... (47.5)
Total purchase price ....................................... £953.2
Amortizable intangible assets
Of the total purchase price, £295.3 million was allocated to amortizable intangible assets including
customer lists and contractual relationships. Customer lists represented existing contracts that relate
primarily to underlying customer relationships pertaining to the services provided by Virgin Mobile.
The fair value of these assets was determined utilizing the income approach. We amortize the fair value
of these assets on a straight-line basis over an average estimated useful life of 3.5 years.
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