Rupert Murdoch (By Eva Rinaldi from Sydney Australia)
21st Century Fox said on Friday that it would sell its pay-television business in Italy and Germany to British Sky Broadcasting Group for more than $9 billion. The deal would boost media mogul Rupert Murdoch’s financial firepower to renew his unsolicited $80 billion takeover bid for Time Warner.
After two months of negotiations, BSkyB—which is 39 percent owned by 21st Century Fox—agreed to pay 2.9 billion pounds ($4.9 billion) in cash, at a small premium of 6.75 euros ($9.09) per share, for 21st Century Fox’s 57.4 percent stake in Sky Deutschland.
BSkyB would provide another 2.07 billion pounds ($3.51 billion) in cash, plus a 21 percent stake in National Geographic Channel valued at 382 million pounds ($648 million), to acquire 21st Century Fox’s wholly owned Italian television company Sky Italia.
Fox turned to Allen & Overy, Morrison & Foerster and Italian firm Mazzoni e Associati for legal representation, while BSkyB sought counsel from British firms Herbert Smith Freehills and Clifford Chance, as well as German firm Hengeler Mueller and Italian firm Legance. Sullivan & Cromwell advised Sky Deutschland.
The deal will turn BSkyB into the top pay-TV provider in three of the four largest markets in Europe, with over 20 million subscribers. It would also strengthen BSkyB’s buying power for programs like Germany’s Bundesliga soccer matches, enabling it to bring quad-play services to a pan-European audience.
“This transaction will create a world-class, multinational pay TV business with enhanced headroom for growth and immediate benefits of scale,” said Jeremy Darroch, BSkyB’s chief executive, in a statement. “The three Sky businesses are leaders in their home markets and will be even stronger together.”
Analysts read 21st Century Fox’s sale of its European assets as an indication that the company would continue to pursue Time Warner. 21st Century Fox first proposed its takeover last month, which was rejected by Time Warner over a myriad of complicating factors such as the stock ownership structure of New York-based Fox, created last year to house the film and television assets of Murdoch’s News Corp.
For 21st Century Fox, a deal with Time Warner would give Fox Sports essential broadcasting rights for professional and college basketball and Major League Baseball to rival the top competitor in that space, ESPN.
Skadden Arps and Hogan Lovells, two longtime legal advisers to Murdoch, advised 21st Century Fox on its previous $80 billion offer, while Time Warner turned to Cravath, Swaine & Moore.
On the deal with BSkyB, 21st Century Fox turned to Allen & Overy and Morrison & Foerster. The Allen & Overy team was led by corporate partners Andrew Ballheimer, Simon Toms, Oliver Seiler, Hans Diekmann and Paolo Ghiglione, antitrust partner Antonio Bavasso and corporate associate Lee Noyek.
In 2013 Allen & Overy advised 21st Century Fox on its $77.5 million deal to acquire PLAZAMEDIA as well as purchase a minority stake in SPORT1/Constantin Sport Marketing.
MoFo’s team included corporate partner Christoph Wagner; tax partners Jens-Uwe Hinder and Sebastian Kost and counsel Sebastian Kost; and associates Friederike Busch, Jens Hackl, Felix Helmstaedter and Anna Wolschner.
MoFo advised 21st Century Fox on the sale of Fox Mobile Group (Jamba) to the Canada-based Jesta Digital Group in 2010, the terms of which were not disclosed.
Herbert Smith and Clifford Chance jointly advised BSkyB. Herbert Smith’s team included M&A partners Stephen Wilkinson and Malcolm Lombers, equity capital market partner Chris Haynes, European competition partner Kyriakos Fountoukakos and IP partner Joel Smith. Associates on the deal were Nancy Roberts, Andy Radford, Joanne Holmes, Francis Dalton, Tom Vaughan, Heidi Gallagher, Nick Root and Victoria Horsey.
Herbert Smith advised on the 481 million pound ($816.5 million) sale of BSkyB’s minority stake in ITV to Liberty Global earlier this week.
Clifford Chance acted advised BSkyB on the new debt facilities with finance partner Rob Lee. S&C represented Sky Deutschland on the deal. The firm did not respond to inquiries about its deal team.