BSkyB has confirmed that it has opened discussions on acquiring a majority stake in European sister pay TV companies, Sky Deutschland and Sky Italia.
As part of what the Murdoch-owned company says are plans to create further value for shareholders, BSkyB has initiated preliminary talks with 21st Century Fox to evaluate the potential take-over of its pay TV assets in Germany and Italy.
BSkyB has said that at the right value, the combination would have the potential to “create a world-class multinational pay TV group.”
If plans go ahead, the move would see BSkyB acquire 21st Century Fox’s controlling stake of Sky Deutschland (57%). As a consequence, BSkyB would be required to make a takeover offer to the public minority of Sky Deutschland in accordance with relevant legislation.
However, analysts at Bank of America Merrill Lynch have responded by saying the move is not what shareholders signed up for.
Daniel Kerven, research analyst at the bank, said that SkyD is overvalued on a standalone basis and is still loss-making. The company has also “struggled to deliver on promised growth and earnings before interest, taxes, depreciation and amortisation forecasts have been cut by [around] 50% over the past year.”
Kerven added that in the past Sky has said it has too many growth opportunities in the UK to pursue international deals.
“[BSkyB] has also said that there would be no more synergy from BSkyB acquiring SkyD than there would be from it buying any other business in Germany […] In our view synergies would be limited,” he said.
“We believe many investors own Sky for either cash returns or for a possible bid […] not for Sky buying expensive European pay TV assets.”
Sky has said that all Board discussions on the potential acquisition of SkyD/Italia will remain solely within a committee of the independent directors of BSkyB, in which directors affiliated with 21st Century Fox do not participate.
In a statement issue don Monday, BSkyB said: “These discussions have not progressed beyond a preliminary stage, no agreement has been reached on terms, value or transaction structure and there is no certainty that a transaction will occur.”
On Monday morning, BSkyB’s shares were down more than 2%, while shares in Sky Deutschland were up about 7%.
