Sky PLC (LON:SKY) shares rocketed by a third and scaled a 9-and-a-half-month high on Friday after 21st Century Fox (NASDAQ:FOXA) announced plans to take full control of the London-listed broadcaster.
Just minutes before the closing bell in London, Sky confirmed it had reached agreement on an offer price of £10.75 per share in cash minus any dividends.
The £10.75 a share cash offer represents a 40% premium to the closing share price on December 6 – the last business day prior to the initial approach being received – and a 36% premium on the closing price on December 8. If approved the deal will cost Fox around £11bn ($13.83bn).
The offer comes five years after a previous bid.
For months now there had been speculation that Rupert Murdoch was preparing to seize the remaining 61% of Sky which he didn’t control.
Over the last year the company’s share price has fallen and the plunge in the value of sterling following the UK’s vote for Brexit made it vulnerable to an American bidder like Fox. Mr Murdoch’s son James was reinstalled as chairman in April and was quoted last year saying that Fox’s 39 per cent holding was not a natural state for the company.
Fox had to abandon a bid to buy the company in 2011 after public and political pressure following the UK phone hacking scandal which led Murdoch’s News Corporation, since then spun off into News-A (NASDAQ:NWSA) in 2013, to close down its The Sun tabloid Sunday sister title News of the World in disgrace.
Sky PLC is a British satellite broadcasting, on-demand internet streaming media, broadband and telephone services company with headquarters in London. It has operations in the United Kingdom, Ireland, Germany, Austria and Italy. Sky is Europe's biggest and leading media company and largest pay-TV broadcaster, with 21mln subscribers and 30,000 employees as of 2015.
For Murdoch, a second successful attempt at taking control of Sky would be something of a homecoming.
Sky PLC was formed in November 1990 by the equal merger of Sky Television and British Satellite Broadcasting, initially to form BSkyB and since 2014 Sky PLC. The BSkyB outfit was founded by Murdoch.
In October 1994, BSkyB announced its plans to float the company on the UK and US stock exchanges, selling off 20% of the company. The stock flotation reduced Murdoch's holding to 40%.
In June 2010, the then News Corporation made a bid for complete ownership of BskyB but this was withdrawn 13 months later as a result of the bad publicity the company received over phone hacking. It also led to the resignation of Murdoch’s successor and son James Murdoch, who was the chairman of both BSkyB and News International, from his executive positions in the UK.
Sky’s present branding and advertising slogan is “Believe In Better”. But whether the takeover will get any easier ride with regulators and competition authorities this time around remains to be seen.
21st Century Fox shares closed down 1.5% at $28.21 on Friday after traded a further 0.4% lower after hours to $28.11.