BSkyB is to acquire 21st Century Fox’s 100% stake in Sky Italia and its 57.4% interest in Sky Deutschland.
The total consideration for the acquisition of Sky Italia is £2.45 billion with approximately £2.07 billion to be paid in cash and the balance to be satisfied through the transfer of BSkyB’s 21% stake in National Geographic Channel International to 21st Century Fox at a value of £382 million.
The acquisition of 21st Century Fox’s shareholding in Sky Deutschland is for a consideration of £2.9 billion in cash, valuing Sky Deutschland at €6.75 per share.
The transactions are subject to regulatory and independent shareholder approval.
Jeremy Darroch, BSkyB’s Chief Executive, said: “This transaction will create a world-class, multinational pay TV business with enhanced headroom for growth and immediate benefits of scale. The three Sky businesses are leaders in their home markets and will be even stronger together. By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns.”
The acquisitions will take BSkyB from 11.5 million customers to 20 million. On an aggregated basis, group revenues will increase from £7.6 billion for the standalone BSkyB to £11.2 billion.
Following the agreement to acquire 21st Century Fox’s 57.4% stake in Sky Deutschland, BSkyB has announced that it will launch a voluntary cash offer to Sky Deutschland’s minority shareholders at €6.75 per share. There is no minimum acceptance condition as BSkyB believes it can realise the advantages of closer collaboration with Sky Deutschland and support its continued growth and development with the 57.4% stake it is acquiring through this transaction.
Subject to the number of Sky Deutschland minority shareholders that accept the offer, the total cash consideration overall may be up to approximately £7.0 billion.
The consideration will be funded in part by the proceeds of a placing of 156.1 million new Ordinary Shares representing approximately 9.99% of the issued share capital of BSkyB. 21st Century Fox has irrevocably undertaken to participate in the placing pro rata in order to maintain its holding in BSkyB at the current level of 39.14%. The remaining consideration will come from a combination of new debt facilities and cash resources.
In addition to the enhanced growth profile of the enlarged group, BSkyB expects to be able to realise £200 million of run-rate cash synergies by the end of the second full financial year after completion, with further additional synergies expected in subsequent periods. The significant majority of synergies are expected to arise from the UK and Italy being the two businesses with larger and more similar direct to home operations. Other than the acquisition of acquired programming rights, cost savings are expected across most areas of the business including the production of live events, commissioning, back office IT systems, rationalisation of suppliers and, over time, in product and set top box development. Management’s current estimate is that the costs to achieve these synergies will be around £150 million.
UK & Germany & Italy
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