European media and telecom giants Vivendi and Vodafone have reportedly approached 21st Century Fox about buying its 39% stake in U.K. satellite company Sky, but backed off after Fox requested a hefty price.
According to several reports in the U.K. press, Vivendi chairman and largest shareholder Vincent Bollore held informal talks with the Murdoch family regarding the Sky stake, but backed off after the controlling shareholders asked for about $28 per share, a 73% premium to its trading price at the time. In addition, those same reports said Vodafone separately approached the Murdochs about Sky, but backed off.
News of the talks sent Sky stock up by about 5% in the past few days, but some analysts doubted that any deal is in the works.
“We believe the simplest explanation (again, if the press reports are accurate), is that Fox was approached, Fox didn't really want to sell, so they indicated a price that was so absurd that no reasonable person would pay it (and if someone was willing to pay it, well, at that price, maybe Fox would sell),” wrote Sanford Bernstein analyst Claudio Aspersi in a note to clients.
Vivendi has long been interested in the satellite company – it reportedly made a bid for Sky back in April but Vivendi later denied interest – and is flush with cash as it has divested several telecom assets to concentrate on its Canal Plus television business.
Vodafone too has been on the prowl for TV assets – it bought Germany’s largest cable operator Kabel Deutschland in 2013 – and could see a Sky purchase as another feather in its growing TV cap. Speculation has also been high that Vodafone and Liberty Global would do a deal – Vodafone confirmed in a terse statement earlier in the month that it was in talks with Liberty Global about certain assets, but was not discussing a takeover.
Other reports speculated that Fox may be trying to drum up interest with its shareholders to make another attempt to buy the remaining interest in Sky, but many believe government opposition to such a deal is still high. Former Fox parent News Corp. had tried to purchase the remaining 61% of Sky back in 2010 for $11.5 billion, but a phone hacking scandal with its U.K. newspapers and government reluctance to strengthen the Murdoch family’s stranglehold on U.K. media forced the company to withdraw the offer. Bernstein’s Aspersi doubted that the family would want to go through that again.
“If Fox is hoping to make another run at Sky in the near-term (in spite of the political opposition which likely remains high), we don't understand why they'd anchor the bid at such a high price,” Aspersi wrote.
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