BSkyB turns down US$12 billion cash offer from News Corp

Broadcaster BSkyB has rejected a cash proposal by part owner News Corp in its bid to buy the rest of the corporation that values it at US$19 billion. However, the company said that it would “recommend a higher offer” from the Rupert Murdoch-controlled group.

UK and Australia’s dominant pay-TV broadcaster, whose growing subscription revenues - thanks to premium sports and bundling of TV and other services - appeal to cash-rich News Corp, said yesterday that the proposal “undervalued the company.”

But BSkyB replied that it would be prepared to recommend an offer of over 800 pence per share.

At 700 pence, News Corp - which has US$8.2 billion in cash and equivalents - would be paying US$11.6 billion for the 61 percent of BSkyB it does not own.

The proposal, which is not a formal offer, represents a 17 percent premium to Monday's closing price. Shares in the 21-year-old company leapt as much as 20 percent, their biggest jump in a single day for a decade, and by 10:21 a.m. British time were trading at 713 pence.