9:53 AM, Apr 25, 2018 — Comcast (CMCSA) said on Wednesday it submitted a superior cash offer for British television company Sky, coming in over the top of an offer by Rupert Murdoch’s Twenty-First Century Fox (FOXA).
Comcast has offered $31 billion (22 billion pounds), a 16% premium to Twenty-First Century Fox’s offer. If approved, the acquisition would increase Comcast’s free cash flow per share in the first year, excluding one-time transaction-related expenses. Comcast said it expects the return on invested capital of the transaction will exceed the average cost of capital.
Sky shareholders would received 12.50 pounds per share in cash, and would be entitled to any final dividend from the company’s financial year that ends on June 30, up to 21.8 pence per Sky share. Comcast Chief Executive Brian Roberts said the company is “delighted” to formalize its offer.
“We have long believed Sky is an outstanding company and a great fit with Comcast,” he said. “Sky has a strong business, excellent customer loyalty, and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business.”
Comcast shares rose 1.3% in early trading while Fox was up 0.8%.
Sky, based in the UK, has 23 million customers in Europe. If the transaction goes through, Sky will be Comcast’s platform for growth across Europe. The companies will have a combined customer base of 52 million that will allow it to invest in new and acquired programming and increase innovation, Roberts said in a statement.
Comcast said if the deal is approved, it will maintain expenditures in Sky News for at least 10 years, establish an editorial board to ensure independence and maintain the company’s headquarters in Osterley for five years. It also won’t acquire any majority interest in a UK newspaper for five years.
To complete the purchase, Comcast said in the statement that it would enter into an unsecured bridge loan for up to 16 billion pounds and an unsecured term loan credit agreement for up to 7 billion pounds ($22 billion and $10 billion, respectively). The acquisition is subject to a number of conditions including anti-trust and regulatory approvals. It also must secure valid acceptances of more than 50% of voting rights than normally exercisable at a general meeting of Sky.
“Comcast believes that, combined, Comcast and Sky will create a business equipped to compete more effectively in a rapidly changing and highly competitive industry,” Comcast said. “Together, the companies would be well positioned to drive growth to provide attractive returns to Comcast shareholders and to benefit the employees and customers of both organizations.”
Companies: Comcast Corporation
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