News Corporation (NYSE: NWS; ASX: NCP) and two funds advised by Permira Advisers LLP raised their offer to acquire the public holding in NDS Group plc (Nasdaq: NNDS) to $63 per share from $60. The announcement came shortly after NDS published its financial report for the 2008 fiscal year. NDS rose 5.6% at the opening on Wall Street to $60.66.
An independent committee of NDS's board reached an agreement in principle with News Corp. and Permira on the deal. The committee's advisors, Citigroup Global Markets Ltd. and Weil, Gotshal & Manges LLP said that the offer of $63 per share was fair. If the offer to buy is completed, News Corp., which currently owns 72% of NDS, will own 49% of the company, and the Permira funds will own 51%.
NDS posted $850.1 million revenue for the 2008 fiscal year, up 20% on the $709.5 million for fiscal year 2007. Net income rose to $160.1 million ($2.72 per share) from $135.7 million. The company had $735 million in cash and cash equivalents at the end of June.
NDS beat both its own revenue guidance of $800-820 million and the market consensus of $831.1 million.
Although fiscal year 2008 was a good year for NDS, 2009 could prove to be challenging. In its guidance, the company predicted $895-905 million revenue in fiscal year 2009, reflecting 5.3-6.5% growth. Analysts are more optimistic; the consensus is $919.3 million. However, NDS predicts that its operating profit will total $185-195 million, up to 5.3% less than the $195.4 million operating profit in fiscal 2008.
However, NDS is more optimistic for fiscal year 2010, beginning in July 2009, and later, predicting 10-15% annual revenue and 15-20% operating profit growth.
NDS CFO Avi Kasten said, "We had excellent performance in 2008, at a time when many companies were struggling. Fiscal 2009 will be more challenging, and we already saw profits erode in the fourth fiscal quarter of this year for a variety of reasons. The shekel's appreciation against the dollar, and the dollar's weakness against the rupee (India is NDS's second largest center of activity after Israel) was one of them. Another factor was the lack of economic clarity. On one hand, we expect a slowdown in some of our business, while on the other hand, our products target high-end clientele, on whom the slowdown will have little effect on their consumption patterns."
"Globes": You have $735 million in cash. Are any acquisitions on the horizon?
Kasten: "We're very conservative about acquisitions. The last two companies we acquired - Jungo and Cast-Up - were in Israel, but we're always on the lookout for opportunities."
Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2008
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