ITV rejects second private equity bid

A consortium led by Apax Partners has had a revised offer for UK media group ITV rejected by the company’s board. The consortium said it would not proceed further with its proposal.

UK broadcaster ITV has rejected a second offer for the company from a private equity consortium comprising Apax Partners, The Blackstone Group and Goldman Sachs Capital Partners.
ITV said in a regulatory statement that the revised proposal for the whole of the company’s issued share capital was worth 86 pence in cash and one new share in the acquiring company.
The consortium also proposed an alternative to the cash offer of 44 pence per new share “so that shareholders who had wished to receive cash only in exchange for all or some of their current ITV shares would have received an aggregate of 130p for each share currently held”.
According to ITV, the offer would have been financed partly by the consortium investing £1.27 billion in the acquisition vehicle to receive 48 percent of ITV’s issued share capital and partly through £3.5 billion of debt.
The proposal was unanimously rejected by the ITV board. “Fundamentally, all of these key elements were unchanged from the consortium’s previous proposal, save that the underwritten cash alternative had been increased so that the cash price, for shareholders who would not have wished to hold shares in this highly leveraged company, was increased from 120p per share, in the original proposal, to 130p per share in the revised proposal,” the board said in the statement.
The initial 120 pence per share offer was rejected by ITV’s board just over a week ago.

In response to ITV’s rejection, the consortium announced late this morning that it “has decided not to proceed further with its proposal”.
The revised offer, said ITV, would place leverage of over 7x EBITDA on the company, which would be “unduly risky for a business that operates in a cyclical environment and has high operational gearing”. The board said that it had hoped for a guaranteed cash exit, but instead the revised proposal “would have enabled the consortium to buy, for less than £1.3 billion, a 48 percent stake in a company which, immediately prior to the leak of the consortium’s approach, had a market capitalisation of £4.8 billion”.
The consortium’s offer had the backing of Greg Dyke, former director-general of the BBC. Dyke currently sits on the media advisory board at Apax Partners.
ITV announced proposals to return an initial £300 million of capital to ITV’s shareholders and said that it “is continuing to evaluate the optimal capital structure of the company”.