GLOBAL - Satellite broadcaster BSkyB's plans to buyback up to 5% of its shares were passed at a shareholder meeting today, however the company announced it would not be extending the buyback scheme past the current financial year. A number of investors, including Hermes Pensions Management and the Association of British Insurers, voted against the proposal today as part of a dispute with Rupert Murdoch's (pictured) News Corp over its plans to extend "poison pill" anti-takeover provisions.
Commenting on the result, Peter Montagnon, ABI director of investment affairs, said: Investors have sent a very clear signal with this vote and it is rightthat the company has decided not to renew the buy-back authority next year. This is a sign of governance working at BSkyB.
The broadcaster held the vote on a waiver of Rule 9 of the takeover code, which exists to prevent any large stakeholder from obtaining a controlling position without paying a premium to other shareholders, because the buyback raises News Corp’s stake in the company from 37.2% to more than 39% and would normally force News Corp to make a full takeover bid.
While the resolutions were both passed, there was strong opposition to the waiver, with some 346,000,000 shareholders voting against and 409,000,000 in favour.
Prior to the vote, a spokesperson for BSkyB said News Corp’s voting rights would be capped at the current level of 37.2% if the resolutions were passed.
Speaking at the annual meeting, deputy chairman, Jacob Rothschild, told shareholders: “A share buy back is an accretive way of returning capital and one that affords the company significantly more flexibility than other ways of returning cash to shareholders.
“However, the board is not immutably wedded to buy backs. I and some of the other independent directors have met with many institutions in the run up to this year's general meeting. We have reflected on their concerns and whilst we do continue to believe that it is appropriate to seek the authority this year, we will not be proposing to renew the buy back authority next year.”
Eleven pension funds across the globe have launched legal action against News Corp over its alleged failure to uphold a promise to seek shareholder approval for any extension of its “poison pill” beyond 12 months. The agreement was part of a series of corporate governance improvements agreed to by the firm in order to win investor support for its transfer of domicile from Australia to the US.
Murdoch has since announced a “poison pill”, due to expire on 8 November, will be extended for two years.
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