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Foxtel, Austar bid takes shape to clear last hurdle

FOXTEL and Austar have cleared their private barriers to a merger and there is now a "definitive" proposal from Australia's city-based pay TV company to take over its country cousin and form a media giant with revenues of more than $2.8 billion.

FOXTEL and Austar have cleared their private barriers to a merger and there is now a "definitive" proposal from Australia's city-based pay TV company to take over its country cousin and form a media giant with revenues of more than $2.8 billion.

As previously signalled, the bid is for $1.52 an Austar share, which values the regional broadcaster at $2.5 billion. That is 33? above the price at which the shares closed yesterday but 54? higher than the price before reports surfaced that one of Australia's most drawn-out corporate marriages might finally happen - after which the price soared.

The proposal still requires approval from the Australian Competition and Consumer Commission, the Foreign Investment Review Board and the Internal Revenue Service in the US, given that Austar's major shareholder, Liberty Global, wants to buy out all the minority shareholders then sell the lot to Foxtel to save on tax.

The scheme of arrangement also needs the support of three-quarters of the Austar shareholders who cast a vote, plus court approval and the blessing of an independent expert.

However, an announcement made last night to the Australian Stock Exchange confirmed that Austar and Foxtel had resolved all the conditions outstanding between themselves, including due diligence, financing and board approvals.

Austar's independent directors have recommended minority shareholders back the scheme as in their best interests in the absence of a better offer.

The Austar chairman and Liberty Global chief executive, Mike Fries, said the bid represented "compelling value" for shareholders.

Foxtel's chief executive, Kim Williams, said the merger made "compelling strategic sense", while his company confirmed it would pay for the takeover with a combination of contributions from its three shareholders - Telstra, News Ltd and Consolidated Media - and debt from the four major banks.


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