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Could Vivendi buy Sky?

French media giant Vivendi is said to be considering a bid to acquire all of the Sky-branded European pay-TV broadcasters.

Reuters have reported ‘early stage discussions’ and analysts at investment bank Exane BNPO-Paribas state that the rumour has been bouncing around for a few weeks. Exane has run some numbers and – assuming a 25 per cent premium to market – says this would be a huge deal for Vivendi (or anyone else) with a bid of €37 billion.

The bank suggests that even it is assumed that Vivendi has a cash pile available of some €10-11 billion to hand, and perhaps even €15 billion if one includes certain disposals which are still working their way through the system, Vivendi would still be looking for finance of about €15 billion to conclude a Sky purchase.

“Synergies are far from obvious at this stage,” says an Exane note. “We see one BIG positive: being in a position to bid for content on a regional basis IF this is the way the content market moves – a real possibility, even if it is years away. Apart from that, Sky is well run and we don’t see massive synergies bar the usual [marginal elements].”

The bank warns that such a complex deal as this would suggest much larger structural risks to the pay-TV business. But it also says that the head of Vivendi, Vincent Bolloré is “very creative” in the way he strikes deals.

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