News
Corporation's bid of 700p or ($41.38 per ADR) for the 61% of British
Sky Broadcasting it doesn't already own was rejected as too low.
BSkyB's independent directors said they would be inclined to accept an
offer above 800p per share, and the companies agreed to work together to
start the regulatory approval process despite not settling on a price.
From the perspective of a BSkyB shareholder, we think the existing offer
is fair, as it exceeds our fair value estimate, but we think a higher
offer is quite possible, given the strategic importance of the deal to
News Corp. We're not too surprised that News Corp. wants the remainder
of BSkyB, as it is fond of the business and has been evaluating how to
deploy its $8 billion cash balance, which puts its net debt/EBITDA ratio
around 1. The offer price is 9% higher than our fair value estimate for
BSkyB, so we think buying back its own shares, which we believe are
slightly undervalued, would be a better use of capital. We're
maintaining our fair value estimate for News Corp., as the likely
premium paid for BSkyB is immaterial to our overall valuation of the
firm.
Michael Corty, CFA is an equity analyst with Morningstar. Allan
Nichols contributed to this analyst note.
SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk
To view this article, become a Morningstar Basic member.
Register For Free
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.