Liberty Global in talks to sell Austar; no agreement

SYDNEY Thu Mar 31, 2011 8:07pm EDT

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SYDNEY (Reuters) - Australia's Foxtel appeared to be inching closer to a deal with Liberty Global (LBTYA.O) to take over pay-TV firm Austar but the target firm denied reports a $1.9 billion ($1.96 billion) price has been agreed.

The Australian Financial Review said Liberty and Foxtel had agreed on a A$1.49 per share price while sources close to the deal told Reuters Foxtel was talking to banks to raise about A$1.2 billion ($1.2 billion) in loans to fund the deal.

"Austar has discussed this matter with Liberty Global and can confirm that today's speculation is uninformed and inaccurate. In particular, no agreement has been reached between LGI and Foxtel, including with respect to price," Austar said in a statement.

Austar shares which rose as much as 6.5 percent on the initial reports but gave up some gains to trade up 3.4 percent to A$1.36 after the denial.

Austar early last month confirmed its biggest shareholder had talked to Foxtel -- owned by telephone firm Telstra (TLS.AX), Rupert Murdoch's News Corp (NWSA.O) and billionaire James Packer's Consolidated Media Holdings CMJ.AX -- about a possible deal but on Friday it said there was no assurance a deal would be reached.

Foxtel's interest in Austar comes in the wake of recovery in advertising revenues and traditional media player's ambitions to tap into new sources of digital revenue. M&A activity is also being spurred by private equity firms push to exit.

The paper said the board's of Foxtel's all three major shareholders have approved the deal, which has been raised several times over the past decade.

A deal is still subject to the approval of Australia's competition regulator, which said it was monitoring speculation of a possible acquisition of Austar by Foxtel when newspapers reported an impending deal early last month.

Analysts have said the deal would create a national pay TV platform with more than 2.3 million customers.

Officials Foxtel could not be reached for comment immediately.

A big pay-TV deal means virtually all of Australia's television industry is involved in some form of ownership change or management shake-up.

Foxtel's move on Austar adds to a shake-up in the sector, after West Australian Newspaper Holdings' WAN.AX $2 billion bid for Seven Media Group, Southern Cross Media's (SXL.AX) A$741 million bid for radio group Austereo, and Lachlan Murdoch's and James Packer's move to take control of Ten Network (TEN.AX).

($1 = 0.968 Australian Dollars)

(Reporting by Narayanan Somasundaram; Editing by Balazs Koranyi)

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