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Is Liberty Global Set To Launch A Takeover Bid For ITV plc?

ITV LogoShares in ITV (LSE: ITV) jumped by over 7% in early trade this morning to 199p, following the announcement that BSkyB (LSE: BSY) has sold a 6.4% holding in the commercial broadcaster to Liberty Global.

The Virgin Media owner is paying 185p per share — the shares opened yesterday (Wednesday) at just under 178p — of which it’s gaining 259,820,065 for the total consideration of around £481m. BSkyB still holds a 0.8% stake in ITV, although will exit the company completely when a hedging transaction closes next year.

Liberty Global chief executive officer Mike Fries commented:

“This is an opportunistic and attractive investment for us in our largest cable market. ITV is the leading commercial broadcaster in the UK and we’re excited to be shareholders.”

Today’s news has inevitably led to takeover rumours circulating the City, despite management at Liberty Global going to lengths to say that it does not intend to make an offer for ITV (it then immediately followed this statement with Liberty Global does reserve the right… to announce an offer or possible offer or make or participate in an offer or possible offer for ITV… within the next six months following the date of this announcement.”)

Liberty has been steadily buying up stakes in UK television companies, having bought the independent producer All3media two months ago, on top of its purchase of Virgin Media last year. At one point, speculation was rife that Vodafone would launch a takeover bid for Liberty Global following the sale of its cash-generative joint venture to Verizon Communications, but those rumours have died down following a number of successful alternative bids.

It shouldn’t come as too much of a surprise that ITV has emerged as a takeover candidate, though, as shareholders who invested in the company at its low point in 2010 (48p) will today be sitting on a four-bagger that yields close to 2%.

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Sam Robson has no position in any shares mentioned. The Motley Fool recommends British Sky Broadcasting.