Sky said on Thursday that it had agreed to acquire 87.45% of Sky Deutschland, including a 57.45% stake held by 21st Century Fox, after "making a takeover offer earlier this year," according to Chad Bray of the N.Y. TIMES. The latest deal "paves the way" for Sky to create a pan-European satellite provider after it agreed in July to "acquire Sky Italia and a controlling stake in Sky Deutschland" for more than $9B from Rupert Murdoch's 21st Century Fox. Fox owns a 39% stake in Sky. The U.K. broadcaster "succeeded in its bid to acquire a larger stake despite a recommendation by Sky Deutschland’s executive board in September that minority shareholders reject the offer" (N.Y. TIMES, 11/6). REUTERS' Kate Holton reported Citi analysts said the "higher than expected take up would increase leverage and force down short-term earnings, but it would also result in higher accretion in future years." Sky has said it has the "funding in place to complete the deal, regardless of how many investors take up the offer." Sky: "Although the higher level of take-up inevitably means more leverage and a higher level of dilution near-term, we are broadly ambivalent about the level of take-up given the financing is in place and our constructive view on Sky Deutschland and the broader Sky Europe deal" (REUTERS, 11/6). BLOOMBERG's Kristen Schweizer reported Sky is paying more than $10B for the Italian and German companies and "while such joint efforts show the logic behind the deal, it still has to figure out how to turn a profit on Sky Italia and get more Germans to watch pay-TV." Westhouse Securities analyst Roddy Davidson said, "Italy is the weak link and Germany is the big opportunity. It's not going to be plain sailing but a main plus is it's going to give Sky more buying power when it comes to sports rights and the extent to which they'll be used across the market." Improving the fortunes of Sky Italia "appears to be the greatest challenge for a new company as the country's TV industry struggles with recession and a sharp decline in advertising revenue." By joining forces, though, "the three companies are positioning themselves to meet the emerging threat from U.S. rivals such as Netflix," the Internet TV provider that is "rapidly expanding in Europe" (BLOOMBERG, 11/6).
