Pan-European pay-television broadcaster Sky, a major broadcaster of sports coverage, has confirmed a takeover approach from US media company 21st Century Fox.
In an announcement to the stock market on Friday afternoon, Sky responded to a rise in the company’s share price by stating that after a period of negotiation, its independent directors and 21st Century Fox have reached agreement on an offer price of £10.75 (€13/$14) per share in cash, less the value of any dividends subsequently paid by Sky. The offer will reportedly be valued at around £18bn.
However, Sky noted that certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox, nor as to the terms of any such offer.
Sky’s independent directors, who have received financial advice from Morgan Stanley, PJT Partners and Barclays, have indicated to 21st Century Fox that they are willing to recommend the proposal to shareholders, subject to reaching agreement on the other terms.
The proposal represents a premium of 40 per cent to the closing price on December 6, the last business day prior to the initial proposal being received from 21st Century Fox, and a premium of 36 per cent to the closing price on December 8, the last business day prior to Friday’s announcement.
Sky has formed an independent committee of the board to consider the terms of the proposal. The Independent Committee comprises Martin Gilbert, Andrew Sukawaty, Jeremy Darroch, Andrew Griffith, Tracy Clarke, Adine Grate, Matthieu Pigasse and Katrin Wehr-Seiter, each of whom the board considers to be free from conflicts of interest with regard to the proposal.
Discussions are continuing and Sky said a further announcement will be made in due course as appropriate. Sky said the announcement had been made without the consent of 21st Century Fox, which now has up until the end of business on January 6 to announce a firm intention to make an offer.
Current Sky chairman and 21st Century Fox chief executive James Murdoch has previously suggested that the media company would bid to acquire complete control of Sky. Murdoch has said that 21st Century Fox would not settle for being a partial shareholder in the company. The media company has a 39-per-cent stake in Sky, which in 2014 completed acquisitions of sister operators Sky Deutschland in Germany and Sky Italia in Italy.
In response to Sky’s announcement, 21st Century Fox later confirmed it had reached an agreement in principle in relation to a possible offer. It added in a statement: “In the past several years, 21st Century Fox has consistently stated that its existing 39.1 per cent stake in Sky is not a natural end position.
“A proposed transaction between 21st Century Fox and Sky would bring together 21st Century Fox's global content business with Sky's world-class direct-to-consumer capabilities, which have made it the number one premium pay-TV provider in all its markets. It would also enhance Sky's leading position in entertainment and sport, and reinforce the UK's standing as a top global hub for content generation and technological innovation.
“There can be no certainty that any offer or transaction will proceed.”