ITV emphatically rejected NTL’s faltering £4.7 billion takeover bid yesterday, claiming that it lacked any logic and was too cheap even to be worth discussing face to face.
The commercial broadcaster revealed that NTL had offered a cash and shares bid worth 120.4p, an offer that ITV believed was so derisory that it did not justify a face-to-face meeting between board members on both sides.
NTL countered by insisting that it was still “considering all its options” — including the possibility of raising its bid — and argued that it was only BSkyB’s share purchase that gave ITV the confidence to reject its proposal.
That claim was rejected angrily by ITV. Sources close to the board categorically denied that Sky’s 17.9 per cent shareholding had had any influence on the ITV board, which unanimously rejected the NTL bid at a meeting on Monday night.
In a statement to the Stock Exchange, ITV said that NTL’s approach “materially undervalues” the company and that “whereas there is obvious appeal to NTL in gaining control of a substantial and successful business, from ITV’s perspective there is little, if any, logic for ITV to combine with NTL”.
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NTL’s offer was made at a meeting between bankers on both sides 11 days ago. While the cable company hoped that its bid would form the basis of a negotiation in a direct meeting between Jim Mooney, its chairman, and Sir Peter Burt, his counterpart at ITV, they never met.
The mooted bid comprised 105p in cash and new NTL shares initially worth 17p, although subsequent weakness in the NTL share price reduced the overall value to 120.4p. ITV shares traded at 105p before NTL’s approach became known; yesterday the stock eased 2½p to 112p.
Sir Peter and the ITV board are understood to have felt that the initial approach was not worth pursuing much further. NTL did not even get the chance to spell out its proposed strategy, which the cable company insisted was reserved for a “principal to principal” meeting.
City institutions endorsed ITV’s rejection with their wallets. Fidelity, which sold its entire 11.5 per cent stake to Sky on Friday, is thought to have rebuilt a new holding of 1.64 per cent. UBS and Lazard Asset Management were also thought to be adding to their holdings.
Fidelity, so long critical of ITV, is understood to be a buyer of the shares at the current price — again suggesting that NTL would have to raise its bid by at least 10 per cent if it is to succeed. Nasdaq-listed NTL shares eased 4 cents to $24.29 in lunchtime trading.
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NTL complained that ITV “has made no effort to engage in further discussions” since its approach, and said that Sky’s holding in ITV “will reduce competition and raise plurality concerns” in the UK. Its hopes were lifted when Ofcom said that it would invite ITV and Sky to comment on whether Sky’s investment in ITV represented a change of control at the channel three broadcaster.
However, sources at the regulator indicated that the inquiry was considered routine, and unlikely to trigger a full investigation, because Sky had remained under the 20 per cent limit set by the 2003 Communications Act. ITV declined to say whether it had any competition concerns about Sky’s investment, despite vocal complaints from NTL and its largest investor, Sir Richard Branson’s Virgin Group.
In March a group of private equity firms including Blackstone Group, Apax Partners and the investment arm of Goldman Sachs abandoned an attempt to take over ITV after its approach was rejected.