BSkyB has been struck a blow after its first bid for Sky Deutchland was rejected, on the grounds that the offer allegedly undervalued the company.
The German firm’s board has said that the offer of £5.35bn was too low, and as a result, has been rejected by the majority of the board.
The British firm, which is 39.1 per cent owned by Rupert Murdoch’s 21st Century Fox, was planning to create a unified European broadcaster after merging with Sky Deutchland and Sky Italia in a deal worth £6.7bn.
BskyB attempted to buy shares in the German pay-TV giant from Murdoch’s 21st Century Fox, which owns over half of the firm, with an offer of 6.75 euro per share for the rest of the group’s capital, a minimum sum required by German law.
The board issued a joint statement: “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 proposed return to the holders of Sky Deutschland shares in the terms of the offer is inadequate from a financial point of view for the concerned holders."
Sky Deutschland’s board has said it will let individual shareholders decide on the offer but urged them to hold out for a higher offer.
BSkyB's proposed takeover of Sky Italia however will still go ahead despite the set-back.