News Corp. Takes NDS Private

NDS Group, a conditional access and encryption-security vendor, has agreed to go private in a deal with News Corp. and several private equity funds, the company said Thursday.

News Corp., two funds advised by Permira Advisers LLP and NDS Group signed an agreement in which Rupert Murdoch’s company and the funds will acquire all issued and outstanding NDS Series A ordinary shares for the previously announced per-share price of $63.

When the deal closes, the equity funds and News Corp. will own about 51% and 49%, respectively, of NDS. News Corp. now owns roughly 72% of NDS.

About 67% of the NDS Series B ordinary shares held by News Corp. would be cancelled in exchange for $63 per share in a mix of cash of about $1.52 billion and a $242 million vendor note. The transaction is expected to close by the end of the year or sometime in early 2009.

NDS’s customers include DirecTV, which News Corp. formerly owned a stake in.   

DirecTV rival EchoStar, now Dish Network, had filed suit against NDS alleging that the vendor had hacked into its conditional-access system. That case came to trial earlier this year in California.

In May, a jury found that NDS had violated piracy law, but only awarded EchoStar $1,500. The satellite provider had sought $1 billion in damages.

“With the convergence of broadband and broadcast technology, new frontiers lie ahead for NDS,” NDS chairman Abe Peled said in a prepared statement abut going private. “NDS needs to have the strategic agility and flexibility to enter into any type of value enhancing transactions. The current ownership structure was imposing certain limitations. Therefore News Corp. has decided to reduce its ownership position in NDS so that NDS can capitalize on these new opportunities with a more independent structure and the expertise of Permira."

The signing of the agreement follows NDS's Aug. 5 announcement that the independent committee of its board of directors had reached an agreement in principle with News Corp. and the Permira Newcos on a price of $63 per share.

The independent committee of the board of directors of NDS is advised by Citigroup Global Markets Limited and Weil, Gotshal & Manges. News Corp. is advised by J.P. Morgan Securities, Skadden, Arps, Slate, Meagher & Flom and Hogan & Hartson. The Permira Newcos and Permira Advisers LLP are advised by Goldman Sachs International and Clifford Chance. NDS is advised by Morgan Stanley & Co. and Allen & Overy.