BSkyB, the pay TV group, yesterday dropped the protracted legal battle over its 17.9 per cent stake in ITV and agreed to sell down to less than 7.5 per cent.
The Department for Business, Innovation and Skills announced yesterday that Sky had given formal commitments to sell the stake. This brings to an end two years of legal action.
Sky bought the whole stake in ITV for £940m in 2006, when the shares were valued at 130p. Morgan Stanley last night said it was acting as sole bookrunner to place 10.4 per cent of ITV’s shares in the market at a price between 48.5p and 49.5p, which would raise about £200m. This marks a loss of almost £350m on the original deal.
The group has already taken the hit on the fall in value on ITV’s shares, carrying out a series of writedowns on the stake so the financial implications, as a Goldman Sachs analyst said last month, “are immaterial”.
The Office of Fair Trading scrutinised the deal and in May 2007 referred it to the Competition Commission which reported at the end of the same year that Sky should slash its stake to less than 7.5 per cent.
Sky first appealed to the Competition Appeal Tribunal in 2008, which was denied and Sky took the fight to the Court of Appeal. The judgement was handed down last month rejecting Sky’s claims once again.
Its last available recourse would have been to appeal to the Supreme Court, but after four judgements had gone against the company many questioned whether it was worth another attempt.
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