Sky Seeks Higher Price in News Corp. Buyout Proposal

LONDON: BSkyB has rejected a buyout proposal from News Corporation that offers 700 pence per share, but is willing to consider a bid of more than 800 pence per share.

News Corp. this morning approached the Sky board with a proposal of an offer to acquire the shares it doesn’t already own in the platform for 700 pence per share. (News Corp. currently holds 686,021,700 BSkyB shares, representing 39.1 percent of the issue share capital.) This offer values the company at £7.8 billion (US$11.5 billion).

“We are proud of the success BSkyB has achieved over the years and of the many innovations it has brought to consumers in the U.K. and Ireland,” said Chase Carey, deputy chairman, president and COO of News Corp. “That success is reflected in its strong public market valuation. Our increased proposal represents both an attractive valuation at approximately 11.8 times EBITDA for the twelve months to 31 March 2010 and a premium of 27.5 percent over BSkyB’s average share price for the last twelve months prior to our approach. We believe that this is the right time for BSkyB to become a wholly-owned part of News Corporation with its greater scale and broader geographic reach. For News Corporation, our Proposal presents an opportunity to consolidate a core business with which we have been closely associated for over two decades. News Corporation will also benefit from increasing the geographic diversification of our earnings base, reducing our exposure to cyclical advertising revenues and increasing our direct consumer subscription revenues. However, we are taking a disciplined approach to this transaction, recognizing both the market valuation of BSkyB and our substantial existing ownership.”

Sky’s independent directors “unanimously consider the terms of the proposal to undervalue significantly BSkyB,” the company said in a statement. However, the board would be prepared to support a proposal of more than 800 pence per share. The board also said it would work with News Corp. is securing regulatory approval for a merger of the two companies.