News Ltd., the Australian arm of global media giant News Corp. (NWS,NWSA), has Tuesday floated an offer to acquire Consolidated Media Holdings Ltd (CMJ.AX) or CMH, for A$3.50 cash per share or a total of A$1.97 billion or $2.0 billion. The move is seen as a bid by media tycoon Rupert Murdoch to boost his stake in Australia's largest subscription television provider Foxtel.
News Corp. already holds 25 percent of Foxtel, with another 25 percent stake being held by CMH and the balance 50 percent being held by telecommunications giant Telstra Corp. (TLSYY.PK,TLS.AX).
The proposed deal will see News Corp. doubling its stake in Foxtel to 50 percent, and gaining 100 percent ownership of Fox Sports, the holder of TV rights for Australian Football League and National Rugby League. News Corp. is already the 50 percent owner of Fox Sports.
Murdoch, an Australian American media mogul, founded News Corp. in 1979 as a holding company for News Ltd. Meanwhile, media investment company CMH is controlled by Australian billionaire James Packer, who is now focusing on expanding his casino empire. Billionaire Kerry Stokes is the second-largest shareholder of CMH, with a 24 percent stake.
Packer is currently seeking to boost his stake in casino operator Echo Entertainment Group Ltd. (EHGRF) by another 10 percent. Earlier in the month, Telstra abandoned talks to acquire Packer's stake in Consolidated Media Holdings.
"CPH welcomes News' proposal and looks forward to CMH and News working together to address the detailed terms and conditions. Subject to this CPH, considering the offer price of $3.50 per share to be fair, will support the Proposal in the absence of a superior cash offer," Packer said in a statement.
The offer represents a 13.7 percent premium to CMH's closing price of A$3.08 on the Australian Securities Exchange on Tuesday.
The indicative offer is subject to several conditions such as approval by the ACCC, FIRB, and the News Corp. board. While acknowledging receipt of the offer, CMH said there is no guarantee the proposal or any transaction will proceed. However, CMH added that its board proposes to engage constructively with News in relation to the proposal.
Recently, Australia's competition regulator approved Foxtel's takeover of regional pay television network provider Austar United Communications Ltd. (AUN.AX) after a lengthy scrutiny and allaying of competition concerns.
News Corp. has been looking to make an investment in a pay television provider after its bid to acquire satellite broadcaster British Sky Broadcasting Group Plc (BSYBY.PK, BSY.L) broke down amid News Corp.'s involvement in the phone-hacking scandal in the U.K.
NWS closed Tuesday's regular trading session at $20.51, up $0.19 or 0.94% on a volume of 1.66 million shares.
In Wednesday's regular trading session on the Australian Securities Exchange, CMJ.AX is trading at A$3.38, up A$0.30 or 9.74% on a volume of 3.84 million shares.
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