Australian satellite and cable TV operator Austar has reaffirmed its commitment to being taken over by the country’s dominant pay-TV operator Foxtel, after the country’s competition regulator today warned it could create a “near monopoly”.
In a…
Australian satellite and cable TV operator Austar has reaffirmed its commitment to being taken over by the country’s dominant pay-TV operator Foxtel, after the country’s competition regulator today warned it could create a “near monopoly”.
In a brief reaction to the Australian Competition and Consumer Commission’s (ACCC) lengthy statement of initial issues on the proposed A$1.9bn takeover, Austar stated that it “remains committed to effecting the transaction and will continue to cooperate fully with all relevant government authorities and regulators”.
Foxtel was unable to comment before the press deadline
As part of ACCC’s informal assessment, the regulator warned the planned Austar/Foxtel deal risked substantially lessening competition in a number of domestic markets.
Although this is only the ACCC’s preliminary view, the regulator’s call for further information on the issues it has identified by 11 August means its final decision on whether the deal can go ahead has been deferred until 8 September 2011.
Foxtel is 50% owned by the country’s telecoms incumbent Telstra, while News Corp and local investor Consolidated Media each own 25%. Austar is 54% owned by US media giant Liberty Global, with the remaining 46% being owned by public shareholders.
According to figures from antitrust specialists GCR, out of the 321 acquisitions ACCC assessed in the 2009/10 financial year, only eight were opposed by the regulator. Out of this eight, four were eventually accepted after the companies involved offered remedies, with the remaining four being blocked.
Foxtel announced its takeover bid for Austar back in May, representing some A$1.52 per share in cash. The offer valued the group at the time at A$2.5bn, including net debt of A$525m as of March 31, or an enterprise value of about 10 times Austar’s consolidated operating cash flow.
Liberty Global is being advised by Credit Suisse and Allen & Overy, Austar hired Goldman Sachs and Freehills, while Foxtel chose UBS.
