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Less than a week after the pair confirmed that an offer had been made, Twenty-First Century Fox has reached an agreement with Sky plc on the terms of a recommended pre-conditional cash offer by 21st Century Fox for the fully diluted share capital of Sky which 21st Century Fox and its affiliates do not already own.
Under the terms of the Acquisition, Sky shareholders will be entitled to receive for each Sky share £10.75 (€12.83) in cash.
The price of £10.75 per Sky share represents:
21st Century Fox currently anticipates that the Acquisition will complete before the end of 2017. Under the terms of the Acquisition, if the Effective Date (as defined in the UK Announcement) has not occurred on or before December 31, 2017, Sky shareholders shall be entitled to receive a special dividend of 10 pence per Sky share, payable in 2018.
The price of £10.75 per Sky share shall be reduced to the extent that:
Sky will not pay any dividends in 2017.
The Cash Consideration implies a value of approximately £11.7 billion ($14.8 billion based upon an exchange rate of USD:GBP 1.27) for the fully diluted ordinary share capital of Sky (excluding the Sky shares already owned by 21st Century Fox and its affiliates).
The independent committee of Sky intends to recommend unanimously that unaffiliated Sky shareholders vote in favour of the Acquisition.
Commenting on the Acquisition, 21st Century Fox said: “As the founding shareholder of Sky, we are proud to have participated in its growth and development. The strategic rationale for this combination is clear. It creates a global leader in content creation and distribution, enhances our sports and entertainment scale, and gives us unique and leading direct-to-consumer capabilities and technologies. It adds the strength of the Sky brand to our portfolio, including the Fox, National Geographic and Star brands.”
“Sky is a creative, commercial, and consumer powerhouse delivering its own content to customers across all platforms. Sky is the #1 PayTV brand in all its key markets, with an exciting growth runway in each. The enhanced capabilities of the combined company will be underpinned by a more geographically diverse and stable revenue base. It will also create an improved balance between subscription, affiliate fee, advertising and content revenues. This combination creates an agile organization that is equipped to better succeed in a global market.”
Martin Gilbert, Deputy Chairman of Sky said: “I am enormously proud that Sky is the number one premium pay TV provider in all its markets and is recognised as a world leading direct-to-consumer business. On top of this, the business has an outstanding track record of growth and has delivered substantial value for its shareholders over
The Independent Committee, which was formed with the express purpose of protecting independent shareholders’ interests in relation to the proposal from 21st Century Fox, has given full consideration to the fundamental value and prospects for the Sky Group.
While the Independent Committee remains confident in Sky’s long-term prospects, as laid out in detail at our recent investor day in October, we, supported by our advisers, believe 21st Century Fox’s offer at a 40 per cent. premium to the undisturbed share price will accelerate and de-risk the delivery of future value for all Sky Shareholders. As a result, the Independent Committee unanimously agreed that we have a proposal that we can put to Sky shareholders and recommend.
The Independent Committee also notes 21st Century Fox’s track record in growing businesses and its ability to continue the development of Sky across Europe, in a world where entertainment and distribution are converging. 21st Century Fox’s ownership will support the delivery of Sky’s strategy and long-term growth, ensuring that it remains at the forefront of Europe’s creative industries.”
The Acquisition is subject to a number of pre-conditions and conditions as set forth in the UK Announcement released today in accordance with Rule 2.7 of the UK City Code on Takeovers and Mergers, including the receipt of regulatory approvals and the approval of Sky’s shareholders.
This announcement should be read in conjunction with the full announcement, which includes additional information about the terms of the Acquisition, the Co-operation Agreement and the Bridge Credit Agreement described below, which was issued in accordance with Rule 2.7 of the UK City Code on Takeovers and Mergers’
21st Century Fox entered into the Co-operation Agreement with Sky pursuant to which 21st Century Fox and Sky agreed to take certain steps to facilitate completion of the Acquisition. The Co-operation Agreement provides for a £200 million break fee payable by 21st Century Fox in the event that regulatory approvals are not obtained prior to the longstop date described in the agreement.
To provide financing in connection with the Acquisition, 21st Century Fox and its 100 per cent owned subsidiary 21st Century Fox America, Inc. entered into a Bridge Credit Agreement with Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners. The Bridge Credit Agreement provides for borrowings of up to £12.2 billion.