BSkyB shares shine after rejecting News Corp bid

British Sky Broadcasting Group (LON:BSY), the leading pay-television provider in the UK, has turned down a £7.8bn offer from Rupert Murdoch’s News Corporation. With BSkyB reportedly wanting News Corp to up its 700p a share offer to at least 800p, the share price for the UK premier sports, movie and entertainment pay-TV coverage provider has rocketed over 20 per cent.

Rob Hull
shareprices.com - Tuesday, June 15, 2010

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BSkyB wants £9bn from News Corp

BSkyB share opened with a gain of 20 per cent rising from 600.50p at the close of Monday’s session to 720.00p when the market opened today. And the price has risen as high as 732.00p in today’s session, gaining 22 per cent in total and topping the FTSE 100 index.

The leap in shares, the biggest jump for the media sector firm for more than 10 years, has come after the group asked for a bid from major shareholder News Corp to buy the outstanding stock to be raised by at least 14 per cent.

BSkyB released a statement today saying: “The Independent Directors, who have been so advised by Morgan Stanley and UBS Investment Bank, unanimously consider the terms of the Proposal to undervalue significantly BSkyB and they would not recommend an offer if it were made at 700 pence per share today, the price indicated in the Proposal.

“In providing advice to the Independent Directors, Morgan Stanley and UBS Investment Bank have taken into account the commercial assessments of the Independent Directors.”

The statement went on to suggest the group may accept an offer of more than 800p per share from Murdoch’s News Corp, which is looking to tie up the 61 per cent stake it doesn’t already own in BSkyB.

The owner of Fox television channels and the Wall Street Journal in the US has been eyeing BSkyB for a while according to experts as it looks to improve its pay-television portfolio.

Murdoch, Chairman and CEO of News Corp, created Sky Television in 1989 and within ten years was the leading investor in satellite television. And with Murdoch having $8.18bn (approximately £5.5bn) in cash at his disposal, the 79-year old media magnate wants to up his firms presence in subscription-driven businesses.

The potential deal will not be a family affair however. James Murdoch, son of Rupert, is BSkyB’s Non-Executive Chairman but will not participate in the negotiations.

Rupert Murdoch first merged Sky Television with British Satellite Broadcasting in 1990 and the UK’s largest pay-TV firm has an estimated 9.77m subscribers.

 

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