BSkyB to Buy Sky Italia, Sky Deutschland Stakes for $8.3 Billion

July 25, 2014 World Screen Top Stories

LONDON: BSkyB has agreed to pay £4.9 billion ($8.3 billion) in cash to purchase 21st Century Fox’s 100-percent stake in Sky Italia and its 57.4-percent interest in Sky Deutschland.

BSkyB will pay £2.45 billion ($4.2 billion) for Sky Italia, with approximately £2.07 billion ($3.5 billion) to be paid in cash and the rest to be paid through the transfer of BSkyB's 21-percent stake in National Geographic Channel International to 21st Century Fox, at a value of £382 million ($648.4 million). BSkyB will pay £2.9 billion ($4.9 billion) in cash for the 57.4-percent interest in Sky Deutschland, valuing the German outfit at 6.75 euros ($9.09) per share.

The combined outfit will have a reach of 20 million customers and group revenues of £11.2 billion ($19 billion). BSkyB said the move creates a "world-class multinational pay-TV business," positioned as the number one pay-TV provider in three of the four largest European markets.

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.”

Nick Ferguson, chairman of BSkyB, added: “The independent directors of BSkyB unanimously believe the strategic rationale for a combination with Sky Italia and Sky Deutschland is compelling. The agreed valuation represents an attractive financial opportunity that will deliver growth and value creation for all shareholders.”

“We have always believed that a combination of the European Skys would create enormous benefits for the combined business and for our shareholders,” said James Murdoch, co-COO of 21st Century Fox. “Ultimately, a pan-European Sky is good for customers, who will benefit from the accelerated technological innovation and enhanced customer experience made possible by a fully integrated business. The transaction underscores our focus at 21st Century Fox on simplifying our structure while delivering significant value to our shareholders. We look forward to participating in Sky’s exciting next chapter under the leadership of Jeremy Darroch, along with the other senior leaders, colleagues and creative talent across all the European Sky businesses.”

“For 21st Century Fox, this transaction was driven by the Company’s objective of maximizing the value of its various Sky holdings in a manner that recognizes the fair value of these businesses while allowing us to participate in the ongoing benefits of Sky through our ownership interest in the enlarged and strengthened company,” added Chase Carey, the president and COO of 21st Century Fox. “This transaction significantly enhances liquidity on our balance sheet to support our key operating principles including the consistent return of capital to shareholders. In this regard, for Fiscal 2015 we will continue our share buyback program and will communicate the details of a renewed share buyback authorization upon the announcement of Fiscal 2014 earnings results on Wednesday, August 6, 2014.”

“Our renewed authorization for our share buyback program will be executed regardless of any potential acquisition or investment activity by the Company,” commented Rupert Murdoch, chairman and CEO of 21st Century Fox. “21st Century Fox’s number one priority is increasing shareholder value in a disciplined manner and, as a result, we will only consider transactions that fully support this objective.”