Austar Welcomes Regulator Delay On Foxtel Bid; Shares Fall

Austar United Communications Ltd. (AUN.AU) on Tuesday said it's confident Foxtel's proposed A$1.9 billion takeover of the regional pay-television company will succeed, as another delay in the anti-trust approval process tested investor nerves.

Having already in August delayed its original September decision target to late November, the Australian Competition and Consumer Commission said on its website that it has delayed the timeline again at the request of Foxtel, which wants to make further submissions to the regulator.

Austar shares fell as much as 7.7% Tuesday as investors feared the delay could mean that Foxtel is having difficulty appeasing the regulator, which expressed strong reservations about the deal in its preliminary decision.

The shares recovered some losses to be down 3.9% at A$1.125 at 0037 GMT after Austar put out its public statement.

"Austar welcomes this suspension as it indicates discussions between Foxtel and the ACCC are continuing," it said.

"Austar remains committed to, and is confident of, bringing this transaction with Foxtel to a successful close in a reasonable timeframe."

Foster Stockbroking analyst Haris Khaliqi agreed more with Austar's take on events, saying the delay is positive as it highlights the ACCC's willingness to negotiate with Foxtel to reach a satisfactory agreement.

"We continue to believe that Foxtel can provide satisfactory undertakings to the ACCC," Khaliqi said. "We would view any weakness in the share price as a buying opportunity given that the deal is priced at $1.52/share, providing a significant return at current levels."

Foxtel is Australia's leading pay television company with more than 1.65 million homes connected. The company is 50% owned by Australian telecommunications giant Telstra Corp. (TLS) and 25% each by Consolidated Media Holdings Ltd. (CMJ.AU) and News Corp. (NWS), the owner of Dow Jones Newswires.

-By Ross Kelly and David Rogers, Dow Jones Newswires; 61-2-8272-4692; [e-mail]