US media giant News Corp has moved a step closer to doubling its stake in Australian pay-TV operatorFoxtel to 50%, after submitting a binding offer to buy its parent company Consolidated Media Holdings (CMH) for A$3.45 cash per share, valuing it at…
US media giant News Corp has moved a step closer to doubling its stake in Australian pay-TV operatorFoxtel to 50%, after submitting a binding offer to buy its parent company Consolidated Media Holdings (CMH) for A$3.45 cash per share, valuing it at A$1.94bn (US$2bn).
Shareholders will also receive a dividend of 6 cents per share, or A$3.51 in total.
This offer, which is slightly higher than the A$3.50 non-binding cash offer reportedly lodged by News Corp’s wholly-owned subsidiary News Limited in June, has been recommended by eight CMH directors.
In a statement today, John Alexander, executive chairman of CMH, said: “The recommending directors consider the scheme to be in the best interests of CMH shareholders in the absence of a superior proposal and subject to the independent expert concluding that the scheme is in the best interests of CMH shareholders.”
Australian businessman James Packer, another CMH director and deputy chairman, also supports the scheme and will reportedly use the proceeds from the proposed transaction to expand his gambling empire.
Two directors, however, who are also executives at Seven Group Holdings – a major shareholder in CMH – have not yet made a recommendation. It is therefore speculated that one of them, Kerry Stokes, might decide to start a bidding war. But several analysts were quoted as saying that this option is unlikely.
News Corp has already received regulatory approvals from the Australian Competition and Consumer Commission, and the Foreign Investment Review Board for the deal.
If green-lit by CMH shareholders, including Seven Group Holdings, the acquisition will see News Corp control 50% of Foxtel, the balance being held by Australian telecoms and media company Telstra. It would also own 100% of Fox Sports, a group of sports channels.
Earlier this year, Telstra had said it might consider buying CMH’s stake in Foxtel, while acknowledging the regulatory scrutiny that it would likely face under such a move.
Shortly after, CMH announced that its 25% stake in Foxtel was not for sale. But the group also revealed, at the time, that it was being advised by UBS after holding “very preliminary” discussions regarding an undefined control proposal.
Today, CMH confirmed that UBS is acting as financial adviser, while Ashurst Australia is legal adviser on the binding offer.
This offer comes a few months after Foxtel closed the acquisition of regional satellite and cable TV operator Austar for A$2.5bn (US$2.6bn).
