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Liberty Global Gets Austar Bid

Liberty Global said late Wednesday that it has received an offer from Foxtel to purchase its 54.2% interest in Australian pay TV giant Austar.
Foxtel, which is jointly owned by Australian telecom giant Telstra, News Corp. and Consolidated Media Holdings, has been expected to make the bid for months. Liberty Global which is the largest cable operator in Europe with 18 million customer relationships in 14 countries, has said in the past it would be interested in divesting of the Australian operation.
The offer values Austar at about 10 times operating cash flow. Liberty said in a statement that assuming a deal was reached it would receive gross proceeds of $1.1 billion for its 688.5 million Austar shares.
In a statement, Austar said that its board of directors, including representatives from Liberty Global, believes that "the proposal is appropriate in the context of a change of control transaction."
Austar has appointed Goldman Sachs and Freehills as advisers. The company said it will work with Foxtel over the coming weeks to hammer out an agreement.
Austar provides satellite TV service to about 750,000 customers in regional and rural Australia and also owns a 50% stake in programming joint venture XYZ Networks, which owns or distributes channels such as Nickelodeon, Nick Jr., Discovery Channel and The Weather Channel in Australia.
In a research note, Miller Tabak media analyst David Joyce wrote that the deal makes sense for Liberty Global.
"We believe this is a good move by Liberty to exit the market and for other Australian-based telco and media companies to use this asset to extract synergies and grow - there are no discernible programming or other purchase synergies for Liberty that would necessitate holding this asset any longer," Joyce wrote.