ITV turns down NTL merger bid

Published Tuesday 21 November 2006 at 13:15 by Liz Thomas

ITV has rejected NTL’s merger proposal, stating that from its perspective there was no strategic logic to the union and that it materially undervalued the network.

The cable group had made a statement of interest on November 9 and followed up with a detailed proposal, however this was made before BSkyB’s surprise acquisition of a 17.9% stake in the network on November 17.

For each ITV share NTL offered 105p and, in addition new NTL shares, worth 17p at the close of business on November 9. The number of shares that would comprise the share element of an offer would be fixed, so that the value of the proposal would fluctuate as a result of movement in NTL’s share price. There was no guaranteed cash alternative to the share element of an offer.

However the board of ITV met yesterday and unanimously decided to reject it arguing that while there was an obvious appeal to NTL gaining control of the network, there was no reciprocal benefit. NTL - in which Richard Branson owns a majority share and is soon to be rebranded Virgin Media - already has debts in excess of £5 billion.

The board added that it felt that the offer undervalued ITV and could not recommend the deal to its shareholders. However, because of BSkyB’s unexpected foray into the situation last week, when it bought close to £1 billion worth of shares, any merger was thrown of course because NTL cannot now buy ITV outright. Industry insiders described the satellite broadcaster’s move as a spoiling tactic.

Meanwhile Branson lambasted BSkyB saying the move was anti-competitive and has called on the Office of Fair Trading to intervene.