NTL is to acquire Telewest, creating the second largest communications company in the UK, with a footprint covering more than half the households in the country.

The two companies have been seen as an item for some time, but with the announcement of their formal engagement, preparations are now under way for their long-awaited marriage.

NTL will pay around $6 billion for Telewest in cash and shares, giving Telewest shareholders about a quarter of the combined company.

Subject to regulatory and shareholder approval, the deal is expected to close in the first quarter of 2006.

Simon Duffy will be the president and chief executive officer and James Mooney will be chairman. Barry Elson, the chief executive of Telewest, will leave the company on completion of the deal, and Eric Tveter, the chief operating officer of Telewest will leave at the end of 2006.

“This is a transforming transaction for the UK cable industry,” said Simon Duffy, chief executive of NTL. “It marks not just the culmination of a decade of consolidation but, more importantly, the creation of a new competitive force in the communications and entertainment sectors in the U.K.”

James Mooney, the chairman of ntl, added: “Underpinned by a national strategy and increased scale and reach, this transaction positions the enlarged company for greater success than either company could have achieved alone. The company will have additional resources to roll out new product offerings – such as HDTV, VoD and VoIP – across its footprint.”

The combined operation will have annual revenues of £3.4 billion and is expected to deliver £1.5 billion in total savings, through optimising networks, systems and applications, implementing best practices and eliminating duplicated activities. A number of job losses are expected where there are overlapping functions.

As reported in their most recent results, Telewest and ntl had approximately £1.7 billion and £1.5 billion in net debt respectively.

The cash portion of the acquisition will be financed through approximately £1.8 billion in new financing and £500 million from existing reserves. The net debt following the transaction will be around £5.7 billion.

The Telewest channel business, Flextech, will be retained, at least for the present. In a briefing to journalists, Simon Duffy said that Flextech was a “key asset” but NTL would now evaluate what to do with the business, which Telewest had put up for auction.