The ITV board has rejected a bid received by NTL, claiming the cable company’s offer “materially undervalues” the broadcaster. It follows Friday’s strike by BSkyB to buy 17.9% of the broadcaster – effectively blocking any real chance of an NTL/ITV merger.
The board met yesterday to discuss the offer and voted unanimously to reject it.
NTL, which is rebranding as Virgin Media and whose largest shareholder is Sir Richard Branson, offered 105p in cash for each share and new NTL shares worth 17p. The new Nasdaq-listed shares would constitute about 12.44% of the enlarged issued share capital of NTL.
Sky paid 135p a share – £960m total – for its slice of ITV on Friday.
ITV says that while there was “obvious appeal” to NTL in gaining control of ITV’s “substantial and successful business”, from ITV’s perspective there is little, if any, strategic logic for ITV to combine with NTL.
The board also felt unable to recommend to ITV’s shareholders that they should take NTL stock as part consideration for their ITV shares. A statement further read: “The board is clear that the proposed offer materially undervalues ITV.”
The rejection is the latest twist to hit ITV. NTL informally approached ITV about a merger earlier this month and looks to have tabled a bid soon after. However, Sky’s acquisition put paid to NTL’s plans.
It, together with Virgin Group, has complained to the Office of Fair Trading and media regulator Ofcom, saying it is in breach of competition rules. Ofcom today announced it would examine Sky’s purchase under the 2003 Commmunications Act.