British pay-TV giant Sky has received a take-over approach from 21st Century Fox, the US based TV and film studio controlled by Rupert Murdoch.
Mr Murdoch founded Sky in November 1990 and later floated the business, although he retains control via 21st Century Fox which holds a 39.14 per cent stake in the company.
The proposed deal offers Sky Plc shareholders £10.75 per share in cash, less the value of any dividends subsequently paid by Sky, representing a 40% premium on Wednesday’s closing price.
Sky’s Independent Directors say “certain material offer terms remain under discussion” but that subject to agreement on those issues they are “willing to recommend the Proposal to Sky shareholders.”
In a statement they add: “Sky has formed an independent committee of the Board (the “Independent Committee”) 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 of the Company considers to be free from conflicts of interest with regard to the Proposal (the “Independent Directors”). The members of the Independent Committee will act in accordance with their duties as directors and, in particular, in order to protect the interests of shareholders.
“Discussions are continuing and a further announcement will be made in due course as appropriate.”
A previous £8bn takeover attempt of the then BSkyB was eventually dropped by Mr Murdoch’s News Corporation in the wake of the phone hacking scandal which led to the closure of The News of the World. Since then News Corporation has been split into two separate businesses, 21st Century Fox and News Corporation which retains its predecessors newspaper, magazine and publishing assets.
Sky has also undergone corporate changes by taking control of its Italian and German namesakes to become a multi-national broadcaster able to leverage larger audiences for control of major content. In the UK it’s also expanded into low-cost streaming services and is launching a new mobile phone brand.
Sky is facing soaring content costs thanks to increased competition from Amazon and Netflix, as well as UK rival BT with which it competes for sports. Being owned by a major content provider could help lower its overheads while giving it greater access to premium content.
Under takeover rules Fox is required to clarify its intentions by no later than 5.00pm on Friday 6th January 2017.