News Corp sells NDS

News Corp, which currently owns 72% of technology and encryption specialists NDS (led by chairman and CEO Abe Peled, left), is to take the company private. The end result will mean News Corp will then own just 49% of the business. Existing shareholders will receive US$60 a share, a 20.7% premium on NDS’ Friday share price of $49.70 a share.
News Corp will partner with private equity outfit Permira Advisors to fund the transaction, in a somewhat complex structure. At the end of the day Permira will own 51% of NDS.

Shareholders of NDS's series A ordinary shares including its American Depository Shares (ADS) would receive about $970 million in total. As of March 31, 2008, there were about 16m series A ordinary shares, according to an SEC filing. Permira will also pay $60 per share for News Corp's series B shares in a mix of $1.5 bn in cash and a $200m vendor note, the companies said. The debt financing will be provided by JP Morgan and Morgan Stanley, according to a company statement.

While News Corp today owns 72% of NDS’ shares, it currently controls 96% of the voting power. NDS said it has appointed a committee of directors who are not on News Corp's board to review the deal. "The transaction has been fully negotiated between News Corporation, Permira and NDS management," News Corp said. "Permira has completed its due diligence, and all of the third party financing is in place."

However, the deal has to be approved by a majority of NDS’ public shareholders, as well as shareholders representing at least three-quarters of the value of publicly-held shares.

The deal is seen as necessary because NDS’ ownership structure has made it difficult for News Corp to tap into NDS’ cash reserves without severe tax implications. News Corp receives $1.7bn in cash and debt. It will now be interesting to see what News Corp does with this windfall, and whether it will help fund an acquisition in Europe (see separate story today).

(Source: Rapid TV News)