21st Century Fox Confirms $14.6B Bid for Sky
Rupert Murdoch's 21st Century Fox has agreed to pay £11.7 billion ($14.6 billion) for full ownership of Sky, satisfying a long-held ambition to control the European satellite company.
The deal that has been fleshed out will see 21st Century Fox pay £10.75 ($13.41) in cash for each Sky share it does not already own, valuing the entire business at about £18.5 billion ($23.1 billion).
The movies and TV giant currently owns 39.1% of Sky and announced plans for a full takeover move earlier this month, more than five years after a UK phone hacking scandal forced Murdoch to abandon a previous takeover attempt. (See 21st Century Fox Bids £18B for Sky.)
Sky provides pay-TV services across several major European markets, including the UK, Germany and Italy, while its UK broadband business has grown into the country's second biggest, trailing only BT Group plc (NYSE: BT; London: BTA) on customer numbers.
In a statement, 21st Century Fox said its offer price represented a premium of about 40% to Sky's closing share price on December 6, the day before it approached Sky with a proposal.
Murdoch is hopeful of completing the deal before the end of next year but it will have to overcome several hurdles before that happens.
Mainstream press reports suggest a number of Sky shareholders think the offer price undervalues the company.
There is also regulatory concern about the growing influence of Murdoch and his media empire in the UK market. Through his News Corp business, Murdoch already owns major UK newspapers, including the Times, Sunday Times and Sun.
By giving Sky extra financial muscle, an acquisition -- should it finally go through -- could spell further bad news for UK telecom incumbent BT, which has previously bid fiercely against Sky for rights to screen soccer and other high-profile sports events. (See BT, Sky Splash £5.1B on Premier League Rights.)
BT is already under intense pressure from regulatory authority Ofcom , which has mandated greater separation between the telco's infrastructure and retail businesses, and Sky's recent entry into the mobile phone market poses an additional challenge. (See Only BT's Dismemberment Will Sate Rivals and Eurobites: Sky Launches Mobile Offer.)
But it can hardly be surprising that a deal has come now. Before December 9, when news broke that an offer was in the works, Sky's Brexit-battered share price was trading 27% lower than at the start of the year. And a fall in the value of sterling -- since UK citizens voted to leave the European Union -- has also made a takeover move look more financially attractive.
With operations in the UK, Ireland, Germany, Italy and Austria, Sky made revenues of about £12 billion ($15 billion), and an operating profit of £1.6 billion ($2 billion), in the financial year ending in June.
By comparison, 21st Century Fox generated $27.3 billion in sales and $4.2 billion in operating income over the same period.
— Iain Morris, , News Editor, Light Reading