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BSkyB value soars after Murdoch bid

BSKYB’s share price soared 19% after the broadcaster left the way open for a takeover by part-owner and founder Rupert Murdoch to buy the remainder of the company.

Murdoch’s News Corporation had a 700p-a-share cash bid for the satellite broadcaster rejected.

This valued the company at £12.2bn.

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But in an unusual move BSkyB, which operates customer contact centres in Dunfermline, Livingston and Uddingston, indicated it would look favourably upon an 800p offer.

This would add £1.8bn to the cost of the company.

BSkyB said its independent directors “would have been prepared to accept” an 800p-a-share bid if regulatory hurdles were safely overcome.

But they did not commit themselves to accepting a future offer at that level.

“Recognising that an offer from News Corp could be in the interests of BSkyB shareholders in the future, and that obtaining any necessary merger clearances would facilitate such an offer, BSkyB has agreed to cooperate with News Corp in seeking those clearances from the relevant authorities,” the directors said.

News Corp wants to buy up the remaining 61% of the company it does not already own.

Last week News Corp made a 675p a share proposition, the two sides announced. News Corp said its latest approach did not amount to a final offer.

BSkyB, meanwhile, said it would not seek a “put up or shut up” order from the Takeover Panel which would force News Corp to make a binding bid or walk away for six months.

Panmure Gordon analyst Alex DeGroote said that because News Corp is “cash-rich” and already has a 39% stake, a successful bid “is the most logical conclusion”.

BSkyB dominates the UK pay TV market with 9.8 million customers.

A takeover would enable News Corp to combine the broadcaster with its other satellite TV operations including Sky Italia and Tata Sky in Asia.

It would also allow the company full access to BSkyB’s cash flows.

Some 21 years after its foundation, the most capital hungry part of BSkyB’s development, including the roll-out of receivers and its investment in becoming a broadband provider, has now ended.

As a pay TV operator, BSkyB has avoided much of the hit taken by rivals from plummeting advertising revenues.

Buying BSkyB would give News Corp, which owns The Times, Sunday Times and Sun newspapers in the UK and Fox News in the US, an even more powerful place in UK media.

Chase Carey, deputy chairman of News Corp said: “We believe that this is the right time for BSkyB to become a wholly-owned part of News Corporation with its greater scale and geographical reach.

“For News Corporation our proposal represents an opportunity to consolidate a core business with which we have been closely associated for over two decades.

“We are taking a disciplined approach to this transaction, recognising both the market valuation of BSkyB and our substantial share ownership.”

Nicholas Ferguson, BSkyB’s senior independent director said: “It is the unanimous view of the independent directors that there is a significant gap between the proposal from News Corporation and the value of the company.”

After climbing as high as 732p, BSkyB’s shares closed at 700, up 99.5p or 16.6% on the day.

Timeline

1989: Sky launches satellite TV service

1990: Sky merges with British Satellite Broadcasting to form BSkyB

1994: Floated on stock exchange

1995: Enters FTSE-100

2003: Customer numbers top 7m

2010: Subscriber numbers at 9.8m

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