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London - Directors of British Sky Broadcasting said on Tuesday they have rebuffed a buyout offer from Rupert Murdoch's News Corp that values the company at £12bn, but were willing to back a sweeter bid.
News Corp, which owns The Sun and The Times newspapers in London, is already BSkyB's biggest shareholder with a 39% stake. Murdoch's son, James, is BSkyB's chairperson.
BSkyB shares shot up nearly 19% to 712.5 pence in midday trading in London.
Independent directors said News Corp's informal offer of 700 pence per share was too low.
The directors say they would have backed an offer above 800 pence, which would value the company at about £13.7bn.
"As News Corp is a cash-rich corporate, with a 39% material minority stake already, this is the most logical conclusion," said Alex DeGroote, analyst at Panmure Gordon.
BSkyB's independent directors did not commit themselves to accepting a future offer at that level, citing "the possible length of time which might be required to satisfy the regulatory preconditions."
'Put up or shut up'
"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 said its approach does not amount to a final offer, and BSkyB 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 offer or walk away for at least six months.
Satellite-based BSkyB has 9.8 million customers and reported a profit of £286m in the three months ending March 31.
"We believe that this is the right time for BSkyB to become a wholly-owned part of News Corporation with its greater scale and broader geographic reach," said Chase Carey, News Corp's chief operating officer.
BSkyB was created by the 1990 merger of News Corp's Sky Television and government-franchise British Satellite Broadcasting.
News Corp already owns pay-TV company Sky Italia, and has stakes in Sky Deustschland in German, Tata Sky in Asia, and FOXTEL in Australia and New Zealand.
"News Corp appears to be taking advantage of the depreciation of sterling against the dollar a theme we expect to drive further M&A (merger and acquisition) across the UK equity market," said Jonathan Jackson, analyst at Killik & Co in London.
Nonetheless, Jackson said the approach was a surprise, "given that News Corp already has significant influence over BSkyB."
- Sapa
