Media giant 21st Century Fox has reached a preliminary deal with Sky to acquire the 61 percent of the company that it does not already own for £10.75 per share – valuing Sky at £18.5bn.
According to an announcement by Sky, independent directors of both companies had “reached agreement on an offer price” of £10.75 a share.
Sky added that “certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox”.
21st Century Fox is one of two companies created from the 2013 spin-off of the publishing assets of News Corporation. 21st Century Fox focuses on the film and television industries, while New News Corp focuses on the newspaper and publishing side of the business. This means that if the takeover goes through, Sky won’t become part of News UK, which publishes the Times, Sunday Times and Sun.
Until July last year, Rupert Murdoch served as CEO and Chairman of the 21st Century Fox, a role he held since its inception as News Corporation in 1979. Mr Murdock is now executive chairman of the company while his son James Murdoch is its chief executive.
Alex DeGroote, analyst at Peel Hunt, was quoted by the BBC as saying that the plunge in the pound sterling since the Brexit vote in June has made Sky less expensive for a dollar bidder such as Fox.
“Sky has not performed well in the UK stock market this year, and is seen as a Brexit loser. Fox is of course also a dollar bidder, and the collapse in sterling makes Sky a less expensive purchase than pre-Brexit,” DeGroote said.
Adding, “There will also be cost synergies, which will reflect economies of scale in technology and content, such as sports and movie rights.”