INL bids for remaining third of Sky TV

Rupert Murdoch's Independent Newspapers Ltd has launched a takeover offer for the remaining third of pay-TV operator Sky Network Television.

INL has offered $3.35 in cash plus three INL shares for every 10 Sky shares, to buy the 34 per cent of Sky it does not already own.

Based on INL's closing share price of $4.27, INL considered the offer worth $4.63 per Sky share ($3.35 in cash plus $1.28 worth of INL shares).

The offer values Sky TV at $1.8 billion. It will pay $600 million for the shares it is seeking to acquire.

Shares in Sky closed yesterday at $4.52.

Twelve-per cent shareholder Telecom has agreed to accept the offer. Telecom also owns 10 per cent of INL

INL recently sold its New Zealand newspaper assets to Australian publisher John Fairfax Holdings for $1.2 billion, and had around $754 million net proceeds.

INL said it would return its surplus cash to shareholders.

INL chairman Ken Cowley said the offer would be made formally in mid-September, and was unconditional.

The offer will be made under the Takeovers Code, and the New Zealand Exchange (NZX) has conditionally waived the requirement for any shareholder approval of the offer.

Once the conditions to the NZX waivers are satisfied, the INL 2003 annual report is available and the prospectus has been finalised and approved, INL would be in a position to give formal notice of the takeover offer to Sky and the NZX, Mr Cowley said.

If successful, INL and Sky would be amalgamated into one company under the Sky name.

Assuming the offer is successful, for each INL share the return of capital is expected to be approximately 80 cents, based on a capital return of $375 million. This would correspond to 24 cents per Sky share based on the terms of the offer.

INL expected to return about $375 million in surplus capital to shareholders by the end of February 2004.

INL also said today it had sold its Australian publishing business, the Geelong Advertiser, to Mr Murdoch's News Ltd for $64 million.

The Geelong Advertiser publishes three newspapers in Victoria and a number of local magazines. INL had earlier rejected a $62 million offer from Fairfax at the time of the sale of its New Zealand publishing business.

INL today reported a full year profit to June 30 of $388.48 million, up from $37.82 million the previous year.

The pre-sale, net profit after tax of $77.3 million was a record. The previous highest net tax paid profit was $50.4 million in 1997.

INL will pay a fully imputed final dividend of 5 cents a share, on top of the 4.5 cents a share interim dividend in March.

"The result is a product of having the right competitive strategy, sustained strong management performance and excellent trading conditions," Mr Cowley said.

- NZPA