21st Century Fox makes the initial bid to takeover Sky

Company - Himanshu Gill - Dec 10,2016

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21st century fox makes the initial bid to takeover sky

USA’s leading media and entertainment Company 21st Century Fox has made a takeover bid for the UK based satellite broadcaster Sky at $23 billion.

The proposed offer calculates the worth at $13.52 per share in cash, a premium of 36% to the closing price on 8th December. Media tycoon Rupert Murdoch is the owner of 21st Century Fox and already owns a stake of 39.1% in Sky. Following the announcement, Sky shares ended 26.6 percent higher at 999.8 pence in London.

Murdoch‘s company owns 20th Century Fox, one of Hollywood’s largest studios and is the parent company behind Fox News. This deal with Sky, Britain’s largest TV broadcaster would create the most powerful media group in the UK.

Sky said that independent directors of both the companies have agreed on the offer price, but are undertaking discussions regarding to certain terms and conditions of the offer. Fox’s directors said that they are confident that Sky would accept the proposed offer, stating that a 39% stake is not a natural end position for Fox.

Labor and Liberal Democrat politicians in the UK said the government had to intervene as it demanded an independent inquiry on the grounds of public interest. Fox has been asked to ‘clarify its intentions’ by 6th January, or else walk away for at least six months under the UK takeover rules.

Analysts have said that this is not the best of deals, but since Sky has not performed well in the UK stock market this year and pound’s 16 percent fall against the US dollar in the wake of the Brexit vote has made it more attractive target for foreign investors.

Rupert Murdoch’s son and Fox’s chief executive James Murdoch was named chairman of Sky this year, despite 30% of Sky shareholders voting against the appointment. This step had largely fueled speculations that Fox would soon make a bid.