Fox and Sky agree to a full Murdoch takeover
Sky has reached an agreement on the terms of a full takeover from Rupert Murdoch’s 21st Century Fox. The deal has been met with controversy since rumours first began circulating, however both parties have now agreed that Fox will pay £11.7bn for the 61 per cent stake in Sky that it does not already own, valuing the FTSE 100 company at £19bn. The acquisition will combine Fox’s film and television influence with Sky’s European distribution powers.
Throughout 2016, there was a great deal of M&A activity within the sector, with big names such as NBCUniversal, Walt Disney, Netflix, Time Warner and Vice Media all being thrown around the M&A rumour mill. The appetite for deal making within this sector comes down to companies seeking ways to expand their capabilities and global reach in content creation and distribution, something which Murdoch is well versed in considering Fox’s dominance in the sector and his other assets, the Sun and the Times newspapers.
However, it is Murdoch’s prominence in this sector which has also been his downfall, with critics raising concerns over the mogul’s excessive influence over the UK media. The UK culture secretary now has little time to decide whether the deal raises any issues that will impact the public. If the secretary deems the extent of Murdoch’s media reach cause for concern, the media watchdog Ofcom could be requested to inspect the transaction, with its impact on media plurality at the forefront of its examination.
While Fox’s acquisition of Sky would certainly be a mega-deal of 2017, the concerns of the UK government and media surrounding the takeover highlights the obstacles that the deal has yet to overcome before successfully completing. Despite both Fox and Sky coming to an agreement on the terms of the takeover, any resistance from regulators could create substantial roadblocks for Murdoch and his team – a significant setback considering his last bid for full control of Sky was abandoned.
Although many businesses use M&A as a means to expand reach and capabilities, increase market share and outmanoeuvre competitors, it is for those exact reasons that Murdoch’s takeover of Sky has come under fire. With hopes that it will be in full control of Sky by the end of this year, we wait with interest to see whether Fox and its chairman and CEO Murdoch will be afforded a smooth takeover, or whether regulators will create further complications for the deal.
Stay tuned to our blog for industry M&A analysis and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.