News Corp. calls offer for BSkyB 'full and fair'

Company makes $11.88 billion bid for British satcaster

LONDON -- Deal or no deal: News Corp.'s £7.5 billion ($11.88 billion) bid for full control of BSkyB already means the protagonists are still laughing all the way to the bank.

BSkyB's share price has enjoyed a handsome fillip since the bid went live, and the past month's activities will certainly prove no tragedy for those executives who are remunerated based on the company's share price.

And despite News Corp. deputy chairman Chase Carey's somewhat sniffy rejoinder that if Sky's board won't take the bait, News Corp. has "other options for its cash" -- when it comes to its investment in the British satcaster, it suddenly finds itself with around 20% more cash than it had before.

Carey's comment on an earnings call Wednesday -- saying that the 700 pence ($11) per share offer for the satcaster remained "full and fair" -- would seem to put an end to News Corp.'s ambitions to complete the buyout process, not least because on the same day BSkyB's shares were trading at 713 pence.

News Corp.'s bid in June this year to acquire the remaining 61% in British satcaster BSkyB that it doesn't already own looked like being an all out battle for the biggest and most profitable pay TV platform in Europe, pitching the mettle of BSkyB's independent directors against the might of Rupert Murdoch's acquisitive desires.

The satellite operator has long been a cashflow jewel in News Corp.'s firmament, providing financial ballast where Murdoch's TV advertising and theatrical businesses have suffered choppier waters.

Analysts and commentators speculated on whether the BSkyB board would crumble and agree to News Corp.'s terms, or would hold out for an increased premium that would properly value the digital entertainment pioneer.

Last week the TV, sports, pay-channels, broadband, HD and PVR-driven behemoth announced that it has almost 10 million British subscribers and posted blockbuster full-year profits up 160% to £1.17 billion ($1.85 billion) on revenues of £6 billion. ($9.5 billion).

Sky's shares have been up around 20% from the 550 pence level it traded at immediately before News announced its acquisition intentions, shooting through the 700 pence News Corp. offer and settling around 15 -20 pence higher. The market, at least, believes that News Corp.'s offer was woefully undervalued.

Indeed some analysts like Johnathan Barrett at Singer Capital Markets have suggested that BSkyB could be worth up to 860p a share, while Nomura recently published a report valuing the satcaster at £10 ($15.84) per share.
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