Austar Sale-off Delayed Further - Analyst Blog

Liberty Global Inc. 's ( LBTYA ) proposed disinvestment of Austar United Communications Ltd. to Foxtel is further delayed. The Australian regulatory authority, Australian Competition and Consumer Commission (ACCC), was all set to deliver its verdict on the proposed merger on November 30, 2011. Surprisingly, the acquirer Foxtel asked for some more time to ACCC so that the company can strengthen its arguments. Earlier, in October 2011, the Australian Foreign Investment Review Board (FIRB) extended the review of the proposed takeover of Austar by Foxtel for another 3 months. The FIRB is waiting for ACCC to take a firm decision on the proposed merger.

In July 2011, Liberty Global decided to divest its operations in Australia. Austar, in which Liberty Global holds 54% stake, entered into a definitive agreement with Foxtel, to sell 100% stake for approximately $2 billion. Liberty Global will get around $1.08 billion. Foxtel is jointly held by Australian telecom giant Telstra, News Ltd., a division of News Corp. ( NWSA ), and Consolidated Media Holdings.All these three shareholders agreed upon the deal.

However, several industry sources predicted that the Australian regulatory authority initially showed its reluctance to clear the deal since it may create a monopoly. Foxtel is the largest pay-TV operator in Australia and Austar is also a leading pay-TV operator. However, both Foxtel and Austar argued that the pay-TV operators in Australia are now facing increasing competition from free-to-air TV stations and online entertainment service providers. ACCC is yet to announce a new date for its decision.

The proposed disinvestment of Austar indicates that Liberty Global will concentrate solely on Europe and some parts of Latin America. From early 2010, Liberty Global is gradually concentrating on strengthening its foothold in Europe through a series of mergers and acquisitions.

LIBERTY GLBL-A ( LBTYA ): Free Stock Analysis Report

NEWS CORP INC-A ( NWSA ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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