17th Jul 2014 12:34
LONDON (Alliance News) - British Sky Broadcasting Group PLC said Thursday it has sold its 6.4% interest in ITV PLC to John Malone's Liberty Global PLC.
Liberty Global said it doesn't intend to make an offer to acquire ITV, but the move provided plenty of grist for the mergers and acquisitions rumour mill in the media sector.
The sale of BSkyB's stake was made at 185 pence per share, a small premium to ITV's closing price Wednesday of 182.95p. Shares in ITV were up 5.6% to 194.07 pence Thursday afternoon, having hit an intra-day high of 202.70 pence, making them the biggest gainer on the FTSE 100.
BSkyB said it intends to use the aggregate consideration of GBP481 million for general corporate purposes. Its shares were trading up 0.5% at 894.01 pence Thursday afternoon.
"This is an opportunistic and attractive investment for us in our largest cable market. ITV is the leading commercial broadcaster in the UK, and we're excited to be shareholders," said Liberty Global Chief Executive Mike Fries in a statement.
Liberty Global is a NASDAQ-listed telecommunications and television company, as well as a major broadband internet provider in the US. It owns British cable company Virgin Media, which it acquired in June of last year.
Accendo Market's analyst Michael Van Dulken said that whilst Liberty Global has said it is not planning to make a bid, "subsequent speculation of a forthcoming bid could well help the shares back to near recent all-time highs of 211p."
Broker Liberum also noted that the acquisition suggests it may be interested in acquiring the asset as Virgin Media, which it owns, "tried to do nearly a decade ago" under Richard Branson.
Liberum does not expect an immediate bid, but said ITV was likely to be seen as a potential merger and acquisition story.
"At the very least, it sends a signal to other potentially interested parties that they would face a possible fight for the asset," Liberum said.
Additionally, the investment bank noted that BSkyB's sale could intensify speculation that it will use the cash to bid for 21st Century Fox Inc's stakes in Sky Italia and Sky Deutschland.
The sale comes after news Wednesday that Time Warner Inc had rejected a USD92 billion bid from Fox, which is owned by another media mogul, Rupert Murdoch. Murdoch founded BSkyB, and Fox owns a 39.18% interest in Sky.
Erik Brannon, senior analyst at IHS, said that, were a merger between Fox and Time Warner to go through, "there could be a bloodbath [...] as some consumers will likely have to bear the brunt of carriage fees which the newly formed company could grow at record rates."
The move has spurred speculation about Fox's motivations and plans for such a merger.
IHS analyst Tim Westcott noted that Time Warner's operating subsidiary Home Box Office Inc, which operates cable network HBO, would be "good fit with Sky's premium pay business and already has long-term output deals with the Sky Atlantic channels. In the US, Fox supplies its movies to HBO."
HBO carries the popular television series 'Game of Thrones'.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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