BSKYB, the satellite broadcaster, this morning announced a £211 million takeover of Easynet, the broadband telecoms specialist.

The deal will allow BSkyB to offer "triple-play" services - a combination of broadband, television and telephony - pitching it against BT as well as the the newly-merged cable companies NTL and Telewest.

Easynet will form part of a new BSkyB division, Sky Broadband.

"Today’s offer reflects the exciting opportunities that now exist to combine quality entertainment with significant high-speed connections," BSkyB chief executive James Murdoch said.

Sky said it would pay 175p in cash for each Easynet share, a premium of 38 per cent to the stock's closing price of 127p last night.

Shares in Sky fell 2p to 517p in early deals today. To track the shares click here.

Easynet is expected to produce underlying earnings of about £26 million next year, and on typical industry multiples a takeover would value the equity at £169 million to £182 million. The company also had £31 million in the bank at the end of June.

Yesterday Easynet shares gained 10p to close at 127p, amid speculation that the takeover price would be higher than the 120p to 130p first mooted. Easynet's founder and chief executive David Rowe is expected to make more than £5 million from the announced deal.

A purchase of Easynet would transform Sky’s strategy — turning the broadcaster into a "hybrid" operator that would begin to deliver television over high-speed broadband as a complement to satellite. Sky is 37.2 per cent owned by News Corporation, parent company of The Times.

Buying Easynet would also allow Sky to go head to head with BT, offering competitive broadband connections and phone services, and challenge cable, which has been the only business that can give customers broadband, pay-TV and telecoms from the one supplier.

However, the purchase of Easynet brings some complications. There is a loss-making continental European business, which Sky is unlikely to want to retain. Sky will have to invest further in Easynet’s network, and rival operators speculate that the sum of money required could be in the range of £150 million to £200 million.

The number of UK broadband connections increased by around 86 per cent from 4.4 million to 8.1 million in the year to June 30 2005, and is projected to continue to grow further, BSkyB, said.

The Easynet broadband network, installed in BT local exchanges that are being "unbundled" to promote competition, reaches about 18 per cent of UK homes and 750,000 businesses it added.

It covers 50 cities and towns mostly in metropolitan areas of England and Scotland where NTL and Telewest hold strong positions.

Mr Murdoch said: "We expect a rapid convergence between Pay TV and broadband. We enter a segment of the market with no incumbencies ... the [acquisition] will enable us to enter a new range of services to customers."

He added that nearly half of Sky satellite TV customers have broadband access and most of these will be reviewing their internet service provider over the next few years.

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