News Corp to buy James Packer's pay-TV stake
News Corp agreed to buy Consolidated Media Holdings for A$1.94 billion (HK$15.4 billion) to boost its stake in Australian pay television as Kerry Stokes weighs making an offer.
News Corp, controlled by Rupert Murdoch, agreed to pay A$3.45 a share and investors would also get a dividend of six Australian cents a share from the target, Consolidated said yesterday.
Stokes' Seven Group Holdings, with a 25.3 per cent stake, has asked for regulatory clearance to make its own bid.
A completed deal would give Murdoch full ownership of the Fox Sports network in Australia and half of pay-television operator Foxtel, while freeing cash for Consolidated's 50 per cent owner James Packer to expand his gaming investments.
Stokes might block News Corp to maintain his position in the nation's largest pay-television business, said Mark McDonnell, an analyst with BBY.
"One way or another, Consolidated is going to get sold," McDonnell said. "We just have to work out if it's a one-horse or a two-horse race."
Consolidated shares closed 0.58 per cent lower at A$3.42. The bid is about 2.3 per cent below the initial A$3.50 a share indicative offer that New York-based News Corp made in June.
News Corp owns 25 per cent of Foxtel and 50 per cent of Fox Sports, matching the stakes held by Consolidated. A successful takeover would put Foxtel at the heart of the newspaper and book publishing company which Murdoch is considering separating from News Corp's entertainment assets.
Foxtel, in which Australia's largest telephone company Telstra Corp holds the other 50 per cent, has a "near-monopoly" on the country's pay-television market, according to the nation's antitrust regulator.
While News Corp's offer has already gained regulatory approval, it remains subject to the support of 75 per cent of votes cast at a meeting scheduled for October 31. Stokes could block it if Seven votes all its shares against News Corp.
"This has got to the point now where Stokes will have to play his hand," said Jason Beddow, the chief executive of Argo Investments.
The fund is Consolidated's third-largest shareholder with a 0.3 per cent stake. The price is reasonable, Beddow said. "At the end of the day whatever James Packer was going to agree with News was going to be the price," he said.
Simon Francis, a spokesman for Seven Group, did not respond to calls seeking comment.