ITV surges as suitors said to be circling again

(Sharecast News) - Shares in ITV surged on Monday following a report over the weekend that potential suitors have begun circling the broadcaster again after a prolonged period of share price weakness and renewed questions about its long-term strategic destiny. According to Sky News, a number of possible bidders for parts or all of the company, whose biggest shows include Love Island, have in recent weeks held early-stage discussions about teaming up to pursue a potential transaction.

TV industry sources told Sky that CVC Capital Partners and a major European broadcaster - thought to be France's Groupe TF1 - were among those which had been starting to study the merits of a potential offer.

The sources also said that RedBird Capital-owned All3Media and Mediawan, which is backed by the private equity giant KKR, were on the list of potential suitors for the ITV Studios production arm.

One cautioned that none of the work on potential bids was at a sufficiently advanced stage to require disclosure under the UK's stock market disclosure rules, and suggested that ITV's board, which is chaired by Andrew Cosslett, had not received any recent unsolicited approaches.

That meant that the prospects of any formal approach materialising was highly uncertain.

The person added, however, that Dame Carolyn McCall, ITV's long-serving chief executive, had been discussing with the company's financial advisers the merits of a demerger or other form of separation of its two main business units.

Its main banking advisers are Goldman Sachs, Morgan Stanley and Robey Warshaw.

Sky said bankers and analysts believe that ITV Studios, which made Disney+'s hit show, Rivals, would be worth more than the entire company's market capitalisation in a break-up of ITV.

People close to the situation told Sky that under one possible plan being studied, CVC could be interested in acquiring ITV Studios, with a European broadcast partner taking over its broadcasting arm, including the ITVX streaming platform.

"At the right price, it would make sense if CVC wanted the undervalued production business, with TF1 wanting an English language streaming service in ITVX, along with the cashflows of the declining channels," one broadcasting industry veteran told Sky over the weekend.

"They would only get the assets, though, in a deal worth double the current share price."

At 0810 GMT, the shares were up 7.3% at 70.30p.