FRANKFURT (Reuters) - The management of German pay TV-provider Sky Deutschland (DE:SKYDn) on Wednesday discouraged minority shareholders from accepting an offer from Britain's BSkyB (L:BSY), saying it undervalued the company.
BSkyB in July agreed to buy the 57 percent stake in Sky Deutschland owned by Rupert Murdoch's 21st Century Fox (O:FOXA), as part of a broader 5.35 billion pounds ($8.7 billion) deal to increase the UK-based company's presence in continental Europe.
BSkyB offered remaining Sky Deutschland shareholders 6.75 euros for each of their shares, as required by German takeover law.
"The management board and the supervisory board believe that the consideration offered by the bidder does not reflect the full potential and thus intrinsic value of Sky Deutschland's business," the company's management said in a joint statement.
BSkyB is also buying Fox's 100 percent of Sky Italia.
Fox also holds 39 percent of BSkyB.
Sky Deutschland Chief Executive Brian Sullivan is the only member of the management board who holds shares in the group and he said he would not be accepting the offer. Two supervisory board members, Stefan Jentzsch and Harald Roesch, also said they would not tender shares they hold.
Sky Deutschland shares were flat at 6.73 euros, around the offer price, by 0800 GMT (9 a.m. BST).
"The management and supervisory board statement fully supports our assessment that the takeover price is to low and does not fully reflect the earnings potential in the company," DZ Bank analyst said in a client note.
The analyst said he would stick to his "fair value" of 7.60 euros per Sky Deutschland share and recommended investors do not accept the offer.
(Reporting by Harro ten Wolde; Editing by Eric Auchard and David Holmes)