Subscription-TV operator FOXTEL is set to finalise its acquisition of AUSTAR after entering into definitive agreements with the regional player and its major shareholder Liberty Global.
FOXTEL made its original $2.5 billion bid on May 26 and has since completed due diligence, financing and final board approvals. The deal – which represents approximately 10 times AUSTAR's operating cash flows for the last 12 months – would create a business with more than 2500 employees and annual revenue of more than $2.8 billion.
“A merged FOXTEL and AUSTAR would make compelling strategic sense and it would continue to invest and innovate in a superb digital service for consumers across Australia, including investing heavily in marvellous new original Australian content”, FOXTEL chief executive Kim Williams said in a statement.
AUSTAR shareholders will receive $1.52 per share if the deal receives regulatory approval from the competition watchdog and the foreign investment review board, followed by minority shareholders, and the court, later this year.
The deal will be structured through a scheme of arrangement that will provide Liberty Global with certain tax advantages. A Libery Global subsidiary will acquire the remaining shares in AUSTAR that Liberty Global does not yet control (funded by a separate FOXTEL entity), before FOXTEL will acquire AUSTAR. The deal structure will not affect the $1.52 per share payment to current AUSTAR shareholders.
FOXTEL provides over 200 channels to customers and is connected to over 1.63 million homes. The company is owned by Telstra Corporation (50 per cent), with the remainder split evenly between News Corporation and Consolidated Media Holdings.