The private equity consortium pursuing a highly leveraged takeover of ITV has abandoned its bid after the commercial broadcaster spurned its advances for a second time.

Its withdrawal comes after the board of commercial broadcaster ITV today unanimously rejected an improved 130p a share offer on the grounds that its proposals to impose a debt burden of £3.5 billion are "unduly risky".

The revised offer for ITV came from Goldman Sachs, Apax Partners and The Blackstone Group. Greg Dyke, a former director-general of the BBC, is an adviser to Apax and has been driving the consortium's bid.

As it dismissed the consortium's second bid proposal, tabled last night, ITV further argued that "the high level of debt would have enabled the consortium to buy, for less than £1.3 billion, a 48 per cent stake in a company which, immediately prior to the leak of the consortium's approach, had a market capitalisation of £4.8 billion".

Shares in ITV rose strongly this morning after The Times reported the new bid approach. In the minutes following ITV's initial rejection of the offer, the shares lost 1.5p - or 1.2 per cent - to 123.5p.

The consortium said simply: "In the light of the response from the board of ITV, the consortium has decided not to proceed further with its proposal."

ITV noted that "fundamentally" the revised offer was unchanged on the original proposal, received and rejected last week, although the consortium has moved to deal with ITV concerns about shareholders that were unwilling to adopt the proposed plan.

Under the terms of the first offer the consortium proposed paying £1.27 billion for a 48 per cent in the company, having used a highly geared debt raising of £3.5 billion to return 86p a share to investors. This would have left investors with shares worth about 34p each.

As an alternative for those investors unwilling to take a stake in the new company, Apax, Blackstone and Goldman told ITV under the new offer that they would put in place an underwritten cash alternative worth 44p a share.

This increased the aggregate payout to ITV shareholders to 130p from the initial 120p.

But ITV's directors, led by chief executive Charles Allen, said that "after careful and thorough consideration", they had rejected the deal.

The broadcaster said leverage of seven times last year's pre-tax profits before exceptionals was "unduly risky for a business that operates in a cyclical environment and has high operational gearing"

"The board's concerns about leverage had previously led it to conclude that a guaranteed cash exit should be offered. Although the board recognised that the consortium had attempted to address this, the board was strongly of the view that the level of the proposed cash exit did not compare favourably with the value that the board believes can be achieved through the delivery of ITV's current plans," ITV said.

ITV added that a cash price of 130p a share represented a premium of just 11 per cent to the price of its shares before the consortium's approach emerged. It said this level did not adequately reflect the change of control that was being proposed.

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ITV receives new bid approach from Dyke's consortium

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