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Interactive TV deal sought
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July 7, 1998: 6:24 a.m. ET
United Video Satellite Group makes $2.8B acquisition bid for Gemstar
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NEW YORK (CNNfn) - United Video Satellite Group Inc. said it has made a bid to acquire Gemstar International Group Ltd. for $2.8 billion in stock.
United Video, which made its offer public late Monday, said it offered Gemstar $45 a share for its 62 million outstanding shares.
United Video provides program guides and other services to media companies. Its best-known offering is the Prevue Channel, which sends on-screen TV listings to more than 50 million homes.
The company, which is controlled by cable giant Tele-Communications Inc. (TCOMA), recently agreed to acquire TV Guide from News Corp. for $2 billion. TCI also has a merger pending with telephone giant AT&T.
Gemstar is known for its VCR Plus+ home video recording system, which lets viewers record television programs by keying in a one- to eight-digit code into their VCRs. VCR Plus+ has been licensed to several top consumer electronics companies, including Sony Electronics and Magnavox.
With its bid for Gemstar, United Video hopes to offer a broad range of interactive TV programming services.
United Video Chairman Gary Howard said in a statement that he believes Thomas Lau, Gemstar's chairman of the board and its largest shareholder, would approve United Video's proposal.
The company also said Viacom Inc., which controls about 6 percent of Gemstar shares, has made it known that it would also vote in favor of the acquisition.
However, the Wall Street Journal reported Gemstar Chief Executive Thomas Yuen is attempting to derail the deal.
"In light of management's previously expressed opposition to our offer, we suggest that, as a matter of good corporate governance, the board establish a special committee of independent directors of the company, with its own financial advisors and legal counsel, to negotiate the terms of the definitive agreement," Howard wrote in a letter to Gemstar's board of directors.
The two companies are also currently fighting in federal court in Tulsa, Okla. over patent infringement.
Shares of United Video (UVSGA) closed Monday at 39-3/8, down 1-1/4. Gemstar (GMSTF) shares finished up 3-5/8 at 42-1/2.
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