ITV rejects NTL merger proposal

ITV has rejected a proposed merger with NTL, citing a lack of "strategic logic" and a "material undervaluation" of the company.

The news comes just days after NTL rival BSkyB took a surprise 17.9% shareholding in ITV.

The proposals - first put forward earlier this month - would have seen NTL offer 105p in cash plus newly-issued NTL shares worth 17p for each ITV share. In aggregate the ITV shareholders would have held around 12.5% of NTL's enlarged share capital.

"The Board believes that whereas there is obvious appeal to NTL in gaining control of ITV's substantial and successful business, from ITV's perspective there is little, if any, strategic logic for ITV to combine with NTL," said the ITV board in a statement today.

Since the proposals were first put forward, NTL's share price had taken a tumble, affecting the fixed share element of the deal and reducing the overall valuation of ITV. Sky paid 135p per share for its holding in ITV.