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The two companies are expected to confirm the negotiations in an announcement to the London Stock Exchange today after shares in Easynet surged 10 per cent to 96½p on Friday, valuing the firm at £115.4 million.
Sources close to the proposed deal said that BSkyB and Easynet had been in “serious talks” for several days but that a final agreement had not yet been reached.
Insiders said that any acquisition would be “weeks, not days” off, depending on any potential rival bid for Easynet.
A takeover of Easynet would enable BSkyB to launch a “triple play” of pay-TV, broadband internet and telephone services, allowing the broadcaster to compete directly with cable television companies for the first time.
Easynet would also give BSkyB access to Britain’s rapidly growing broadband internet market, pitting the company against the likes of BT, AOL and Wanadoo.
An estimated 50,000 UK consumers sign up to high-speed internet subscriptions each week, and the total number of UK broadband customers is expected to top eight million by December.
A deal with Easynet would also provide BSkyB with a broadband service to support its move into video-on-demand, which it is not possible to do with a satellite service.
A push into the broadband internet market would be the first big strategic move by James Murdoch since he became BSkyB’s chief executive nearly two years ago.
Mr Murdoch is the younger son of Rupert Murdoch, chairman of BSkyB and chairman and chief executive of News Corporation, which owns 37.2 per cent of BSkyB. News Corp is also the parent company of The Times.
News of the talks comes two weeks after NTL, the Nasdaq-listed cable television company, announced a $6 billion (£3.4 billion) takeover of its UK rival Telewest to create a national cable company. NTL and Telewest already offer “triple play” packages.
Although market rumours have in the past named Easynet as a potential target for trade buyers such as France Télécom, it is understood that the firm is currently negotiating only with BSkyB.
Easynet and BSkyB both declined to comment yesterday. Analysts speculated that any offer for Easynet was likely to be pitched at between 120p and 130p a share, valuing the company at about £155 million.
David Rowe, the chief executive of Easynet, would pocket more than £4 million for his 3 per cent stake in the company if the deal goes through.
BSkyB last week raised about £1 billion in a three-tranche bond offering and admitted that the money could be used to fund acquisitions. The company said that it wanted to “set the pace of change in media and distribution”.
Easynet is unlikely to be the sole target of BSkyB’s internet ambitions. Sources said that the satellite company could also have in its sights Pipex, the internet service provider, and Homechoice, the digital TV service.
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