Foxtel's proposed bid for regional pay-TV operator Austar is fair and reasonable for shareholders, according to an independent expert's report.
The Austar-appointed expert, Grant Samuel, valued the company at between $1.23 and $1.40 per share, which is below the current $1.20 share price and the $1.52 bid price. It also said there is a low probability of an alternative superior proposal.
Nonetheless, the $1.23 to $1.40 per share valuation did not include the value of an estimated $55 to $60 million in synergies that the merger would produce.
The deal now hinges on approval by the Australian Competition and Consumer Commission, which highlighted a number of concerns about the transaction in July.
"The extensive nature of the ACCC's concerns around a reduction in competition for content and subscribers suggests that the probability of the merger going ahead in its current form remains uncertain, although both Austar and Foxtel remain confident that the transaction will be approved by the ACCC," Deutsche Bank analysts said in a report.
The Austar-Foxtel scheme document also said that if the ACCC and Foreign Investment Review Board (FIRB) approval was not received by February 3, 2012, the proposed scheme and general meeting to approve the deal would be postponed.
Contact this reporter at bswift@www.if.com.au or on Twitter at @bcswift.