Rupert Murdoch moved closer to achieving his long-held ambition to take control of Sky as his 21st Century Fox offered to acquire the 61% of the U.K. satellite broadcaster it does not already own.
Sky on Friday said it had agreed to a preliminary deal with Fox that values Sky at 10.75 pounds a share in cash ($13.58), or about $23 billion, representing a premium of 36% to the closing price on Thursday.
The stock closed 26.6% higher in London following the announcement, though Sky cautioned that “certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox, nor as to the terms of any such offer.”
According to Reuters, Fox would pay 11.25 billion pounds ($14.2 billion) for the rest of Sky. The proposed deal “would bring together 21st Century Fox’s global content business with Sky’s world-class direct-to-consumer capabilities, which have made it the number one premium pay-TV provider in all its markets,” Fox said in a news release.
“It would also enhance Sky’s leading position in entertainment and sport, and reinforce the U.K.’s standing as a top global hub for content generation and technological innovation,” Fox added.
As BBC News reports, Murdoch “has sought to take full control of Sky for many years.” In 2011, Fox’s predecessor company, News Corp., withdrew a $12 billion offer amid a firestorm over phone-hacking by Murdoch’s News of the World newspaper.
The media mogul’s son, James Murdoch, was named chairman of Sky this year, fueling speculation that Fox would make a bid.
Alex DeGroote, an analyst at Peel Hunt, said he would be surprised if the deal did not go ahead. “Sky has not performed well in the U.K. stock market this year, and is seen as a Brexit loser,” he told the BBC. “Fox is of course also a dollar bidder, and the collapse in sterling makes Sky a less expensive purchase than pre-Brexit.”