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Firm Offer for U.K. Broadcaster Sky Announced by Rupert Murdoch's Twenty-First Century Fox

Firm Offer for U.K. Broadcaster Sky Announced by Rupert Murdoch's Twenty-First Century Fox
In an all-cash deal that values the European pay-TV broadcaster Sky at £18.5 billion ($23.4 billion), Rupert Murdoch's Twenty-First Century Fox took a second stab at a full takeover of Sky on Thursday.
The U.S. mass media corporation currently offering a 36 percent premium to the U.K. company's undisturbed share price as of December 8 through its offer of £10.75 per share for the slice of Sky which it does not currently own. This deal would see Fox clinch the other 61 percent, from the currently ownership of approximately 39.1 percent of Sky's shares. Fox is the founding shareholder in Sky.
However the offer only matches the level at which the share price was trading earlier this year given the stock at that date was hovering at around four-year lows. The economics have been made eminently more digestible for Fox as there has been a significant depreciation in sterling versus the U.S. dollar since the EU referendum in late June.
"The 21st Century Fox Board and the Independent Committee of Sky are pleased to announce that they have reached agreement 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," a statement from Sky on Thursday said.
Amid a media storm surrounding a torrid phone-hacking scandal related to the Murdoch-controlled News of the World tabloid and concerns over his empire's concentration of media assets, a similar buyout approach for Sky in 2010 failed and Murdoch and his team will be hoping it is second time lucky.
Murdoch shunted the TV and Hollywood studio assets into Fox subsequent to the deal's collapse after spinning off his publishing assets into a new entity, News Corp. The mogul claims the media concentration issue consequently no longer exists.
Simultaneously, the news information landscape in recent years has been broadened by the ascendance of alternative online and mobile news sources such as the Huffington Post, VICE and BuzzFeed.
Despite such claims, the deal is expected to be subjected to a closely scrutinized and politically contentious review. Decision on whether the case should be referred to the U.K.'s media regulator, Ofcom and whether the case ignites public interest concerns would have to be taken within ten days by Karen Bradley, the British culture secretary. Opinion on whether the deal raises competition concerns although it approved the previous approach in 2010 would also be expressed by the European Commission.
The less common "scheme of arrangement" method allowable under U.K. takeover law is being sued to pursue the deal. In the traditional takeover process, a bidder needs to achieve under the process 90 percent threshold approval from independent shareholders and under this new process the bidder would be required to obtain approval of only 75 percent of independent shareholders for the deal to be legally pushed through and hence this process can be quicker than a traditional takeover. However, under the scheme of arrangement, Fox would be prohibited from voting given its lack of independence.

Christopher J. Mitchell

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