Virgin Media owner Liberty Global has acquired BSkyB’s 6.4% stake in ITV for £481m.
ITV’s share price rose 7% to 196p in early trading as investors enthusiastically greeted the move as a signal that the UK’s largest free-to-air commercial broadcaster is likely to be snapped up.
BSkyB swooped to take a 17.9% stake in ITV for £940m in 2006 as a blocking move to stop the threat of a takeover by NTL, which later merged with Telewest to create Virgin Media.
Now John Malone’s cable giant Liberty Global, which snapped up Virgin Media last year for £15bn, has renewed the prospect of a takeover.
Liberty Global chief executive Mike Fries said: “This is an opportunistic and attractive investment for us in our largest cable market. ITV is the leading commercial broadcaster in the UK and we’re excited to be shareholders.”
The company said that it does not intend to make an offer to buy ITV outright, but it does reserve the right to do so within the next six months.
ITV’s recovery has seen its market capitalisation surge to a pricey £8bn, but increased activity by US media giants in the UK has not dampened speculation that ITV is a target.
“It is hard to see how this will not be looked at as anything other than Liberty planting a flag in the ground for a potential acquisition at some point (or, at least, looking to block another bidder),” said Ian Whittaker, an analyst at Liberum. “Virgin Media did look to buy ITV nearly a decade ago and presumably the rationale for a deal then (access to content; help to support the Virgin brand and / or grow customers; financial engineering etc) still exists now”.
ITV’s potential attractiveness to buyers was underlined on Wednesday when its share price rose 4% on the back of the news that Rupert Murdoch’s 21st Century Fox had made an $80bn offer to buy rival Time Warner.
MTV owner Viacom recently bought Channel 5 for £450m.
NBC Universal has been relatively regularly speculated as being interested in ITV, while cable giant Discovery has been keen to explore free-to-air TV opportunities.
Liberty Global and Discovery, which counts Malone as its most powerful shareholder, recently teamed up to buy Skins and Midsomer Murders maker All3Media for £550m.
BSkyB, which will still hold a 0.8% stake in a hedge in ITV that will eventually unwind, said that it intends to use the proceeds of the sale for “general corporate purposes”.
However, UBS analyst Tamsin Garrity said that the sale could be linked to the plan to create Sky Europe – which will see BSkyB buy out 21st Century Fox’s Sky Italia and Sky Deutschland stakes – to help strengthen its balance sheet ahead of the deals.
In 2010, the court of appeal ordered BSkyB to sell down its ITV stake to 7.5% over competition concerns.
BSkyB sold a 10% stake in February that year for £196m, and has sold all but a fraction of the remainder to Liberty Global, meaning it has made a loss of about £280m.
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