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News Corp., Permira To Buy Out Public Shareholding In NDS Group

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Diversified media firm News Corp. (NWS), along with two companies formed by private equity firm Permira Advisors LLP, revealed a proposal to buy out public shareholding of U.K-based pay-television technology company NDS Group PLC. As a result, NDS will cease to be a public company. The proposal involves the sale of 51% stake in NDS to the Permira companies, with News Corp. retaining the remaining 49% interest. News Corp. and Permira expect the deal to be effective in the fourth quarter of 2008.

As per the proposal pending with an independent committee of NDS, News Corp. would sell all of the outstanding Series A ordinary shares of NDS Group for $60 per share in cash and the 68% Series B ordinary shares for the same price aggregating about $1.5 billion cash and a $200 million vendor note.

The offer price represents a premium of 20.7% over the ADS closing price for NDS Group on June 27 and 23.5% over the average closing price for NDS Group for the three months ending June 27. If the proposal culminates in a transaction, News Corp. would retain ownership of the remaining 32% of the Series B ordinary shares and NDS Group would issue new Series B ordinary shares to the companies represented by Permira.

Funds advised by Permira will be providing the equity financing for the transaction, while JP Morgan and Morgan Stanley will provide the debt financing. Permira has completed its due diligence and arranged all the third party financing.

News Corp. and Permira would implement a scheme of arrangement, consummation of which would be subject to court approval, the approval of Series A shareholders, the availability of financing and other customary conditions. The transaction would be funded by a mix of newly incurred NDS senior and mezzanine indebtedness, an investment provided by the Permira companies and cash on hand at the NDS group.

Since NDS Group is listed on Nasdaq, the deal would be subject to review by the Securities and Exchange Commission. The proposal will be considered by the independent committee before making recommendations as to whether to go ahead with the proposed transaction and whether shareholders should approve the deal.

In a similar move, Time Warner Inc. (TWX) in May revealed the split-off of its cable division Time Warner Cable Inc. (TWC) to refocus as a pure media content company, concentrating on movies, TV programming and magazines. As part of the deal, Time Warner would exchange its 12.4% stake in TW NY Cable Holding Inc. for 80 million newly issued shares of Time Warner Cable's Class A common stock that would increase Time Warner's ownership stake in Time Warner Cable from to 85.2% from 84%.

NWS ended Friday's trading at $15.73, down 2.78%, on a volume of about 11.24 million shares. The stock has been moving in a $15.53-$24.95 range for the past 52 weeks, with a three-month average volume of about 3.21 million shares.

by RTT Staff Writer

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