Liberty Global Swoops For BSkyB's ITV Stake
The owner of Virgin Media has confirmed its purchase of a minority stake in ITV in a deal that seals BSkyB's effective exit from an investment made nearly eight years ago.
In a statement to the London Stock Exchange, Liberty Global said it had acquired almost 260m shares in ITV, equivalent to a 6.4% stake in the UK's biggest commercial broadcaster.
BSkyB, which has received approximately £481m for the stake, still technically owns 0.8% of ITV, but that ownership will cease with the closing of a hedging transaction next year.
The confirmation of Sky News' report that a deal for the ITV stake was imminent marks the latest UK expansion of Liberty Global, following its takeover of Virgin Media last year and the purchase in May - with Discovery Communications - of All3media, the independent television producer.
Liberty Global lodged an interest in buying BSkyB's ITV stake after learning of its intention to sell them to institutional investors through a placing, sources said.
Thursday's deal is financially attractive for BSkyB, the owner of Sky News, which secured a price of 185p-a-share, a 5% premium to Wednesday's opening ITV share price.
Mike Fries, Liberty Global chief executive, described the stake purchase as "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," he said.
In its statement, Liberty said it did not intend to make a full offer to buy ITV, which has seen its share price soar in recent years under the management of Adam Crozier, the former Royal Mail and Football Association boss who is its chief executive.
The sale by BSkyB of its ITV shareholding effectively completes its exit from an investment made in 2006, when the pay-TV broadcaster snapped up 17.9% of its terrestrial rival for 135p-a-share, or £940m.
That move was widely perceived at the time as an attempt to thwart a takeover of ITV by NTL, the cable group which eventually became part of Virgin Media - a suggestion denied by BSkyB at the time.
BSkyB was subsequently ordered by regulators to reduce its ITV shareholding to below 7.5% and fought a two-year legal battle before a final ruling by the Court of Appeal.
It complied with that instruction in February 2010, offloading the majority of its holding for just under £200m or 48.5p-a-share, crystallising a substantial loss.
Thursday's deal significantly reduces the overall loss for BSkyB on its overall ITV shareholding.