Business News
News Corporation and Permira Announce Proposed Acquisition of Publicly Held NDS Group plc Series A Ordinary Shares
Monday 30. June 2008 - News Corporation to also sell approximately 68% of its Series B Ordinary Shares Transaction will result in News Corporation owning 49% of NDS
News Corporation and two newly incorporated companies formed by funds advised by Permira Advisers LLP (the “Permira Newcos”) today announced that they have proposed a transaction to an independent committee of the board of directors of News Corporations majority-owned public subsidiary, NDS Group plc, which would result in NDS ceasing to be a public company, and Permira Newcos and News Corporation owning 51% and 49% of vote and value in NDS, respectively.
The proposed transaction components would include:
All issued NDS Series A ordinary shares, including shares represented by American Depositary Shares (“ADSs”) traded on NASDAQ, would be cancelled for per share consideration of $60 in cash;
Approximately 68% of the Series B ordinary shares held by News Corporation would be cancelled in exchange for $60 per share in a mix of cash of approximately $1.5 billion and a $200 million vendor note. News Corporation currently owns approximately 72% of the equity and 96% of the voting power of NDS through its ownership of 100% of the outstanding Series B shares. News Corporation will retain ownership of the remaining 32% of the Series B ordinary shares it currently holds, resulting in it owning 49% of NDS pro forma for this transaction;
NDS would issue new Series B ordinary shares to the Permira Newcos representing 51% of its equity pro forma for this transaction;
The equity financing for the transaction will be provided by funds advised by Permira and the debt financing will be provided by JP Morgan and Morgan Stanley.
The proposed consideration of $60 per share to be paid to all holders of NDS Series A shares, and to News Corporation for the sale of its NDS Series B shares, represents a premium of 20.7% over the ADS closing price of $49.70 per share on June 27, 2008. However, given that a significant portion of NDSs equity value is currently due to its cash balance of $696 million, or approximately $11.62 per share, the premium in the proposed transaction is computed after backing out the cash value per share from both the offer price and the trading price. On this basis, the cash-adjusted premium represented by the proposed transaction is:
27.1% over todays (June 27, 2008) closing price for NDS ADSs of $49.70 per share;
23.5% over the average closing price for NDS ADSs of $50.80 per share for the three-months ending on June 27, 2008; and
21.8% over the average closing price for NDS ADSs of $51.16 per share for the six-months ending on June 27, 2008.
The transaction has been fully negotiated between News Corporation, Permira and NDS management. Permira has completed its due diligence, and all of the third party financing is in place.
The proposed transaction represents an attractive alternative for shareholders: it provides an excellent opportunity for public shareholders to exit an illiquid investment at an attractive price in a very challenged financing and economic market environment; it offers Series A shareholders the same price per share as News Corporation is receiving for its high vote Series B shares, representing a material premium for shares that do not confer control; and, it has a high level of certainty if recommended by the independent directors.
About The Proposed Transaction
If the proposed transaction proceeds, News Corporation and Permira intend to implement the transaction by way of a scheme of arrangement (“Scheme”) under Part 26 of the Companies Act 2006 (U.K.). Consummation of the Scheme will be subject to court approval, the approval of Series A shareholders representing a majority in number and 75% in value, the availability of financing and other customary conditions, including the receipt of required antitrust approvals. The transaction as proposed would be funded by a mix of newly incurred NDS senior and mezzanine indebtedness, an investment provided by the Permira Newcos and cash on hand at the NDS group. In the event that the proposed transaction proceeds, News Corporation and Permira anticipate that the Scheme would become effective in the fourth quarter of 2008.
As a result of NDSs listing on NASDAQ, the transaction would be subject to review by the Securities and Exchange Commission. The UK Panel on Takeovers and Mergers has confirmed that the City Code on Takeovers and Mergers (the “City Code”) will not apply to any transaction involving NDS, as a result of the place of central management and control of NDS for the purposes of the City Code. If the proposed transaction is consummated, NDS would cease to have a listing on NASDAQ or have publicly traded equity securities.
The independent committee, which includes neither directors nor executive officers of News Corporation nor executive directors of NDS, will consider the proposed transaction and make recommendations as to whether NDS should enter into the proposed transaction and whether shareholders should vote to approve the proposed transaction. News Corporation executives who sit on the NDS board support the authority of the independent committee and understand it has retained its own independent legal and financial advisors to assist in its consideration of the proposed transaction.