News Corp is defying the unanimous rejection of BSkyB’s independent board and sticking to its 700 pence per share cash offer for the 60.9% that it does not already own in the UK satellite broadcaster.
Commenting on the offer in its full year fiscal 2010…
News Corp is defying the unanimous rejection of BSkyB’s independent board and sticking to its 700 pence per share cash offer for the 60.9% that it does not already own in the UK satellite broadcaster.
Commenting on the offer in its full year fiscal 2010 results, Chase Carey, the media giant’s deputy chairman, said in the offer was “full and fair” and that, at present, News Corp had no intention of raising it. He added that the group has other options for its cash pile, including backstopping the proposed ?340m financing for Sky Deutschland.
It had been widely speculated that News Corp would up its 700 pence per share cash offer after BSkyB’s independent directors said they were seeking in excess of 800 pence per share.
News Corp’s offer for control of BSkyB represented a 22% premium to the target’s 574 pence share price at the close of business on June 9, the day prior to its approach, which valued the company at £12.8bn. At the time it also represented approximately 11.8x BSkyB’s EBITDA for the 12 months to March 31.
The logic of a full takeover for News Corp would be that it would significantly reduce its dependence on cyclical advertising revenues, increasing the percentage of its income derived from more stable subscription revenues from around 10% to more than 28%.
It would also reduce the group’s reliance on its US-based businesses, and could pave the way for Europe-wide consolidation of its satellite broadcasting assets, combining BSkyB with Sky Deutschland and Sky Italia.
BSkyB’s independent directors have hired Herbert Smith as legal adviser over the potential acquisition, and Morgan Stanley and UBS as advisers. News Corp is being financially advised by Deutsche Bank and JPMorgan Cazenove, with Skadden Arps Slate Meagher & Flom providing legal advice.
Any transaction would still be subject to regulatory approval from UK and EU competition regulators and the two parties have agreed to work together to proceed with the regulatory process in order to facilitate the transaction should it go ahead.
