GBP 11.7 BN DEAL - RECOMMENDED CASH OFFER FOR SKY PLC ("SKY") by TWENTY-FIRST CENTURY FOX, INC. ("21ST CENTURY FOX")
RECOMMENDED CASH OFFER
FOR SKY PLC
("SKY")
by
TWENTY-FIRST CENTURY FOX, INC.
("21ST CENTURY FOX")
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary
· The 21st Century Fox Board and the Independent Committee of Sky are pleased to announce that they have reached agreement on the terms of a recommended pre-conditional cash offer by 21st Century Fox for the fully diluted share capital of Sky which 21st Century Fox and its Affiliates do not already own.
· Under the terms of the Acquisition, Sky Shareholders will be entitled to receive:
for each Sky Share: £10.75 in cash.
· The price of £10.75 per Sky Share represents:
- a premium of approximately 40 per cent. to the Closing Price of £7.69 per Sky Share on 6 December 2016, being the last Business Day before the date on which an initial proposal was received from 21st Century Fox by Sky;
- a premium of approximately 36 per cent. to the Closing Price of £7.90 per Sky Share on 8 December 2016, being the last Business Day before the start of the Offer Period; and
- a multiple of approximately 11.4 times Sky Adjusted EBITDA of £2,178 million for the twelve month period ended 30 June 2016.
· 21st Century Fox currently anticipates that the Acquisition will complete before the end of 2017. Under the terms of the Acquisition, if the Effective Date has not occurred on or before 31 December 2017, Sky Shareholders shall be entitled to receive a special dividend of 10 pence per Sky Share, payable in 2018.
· In addition, Sky Shareholders shall be entitled to receive any dividend declared and paid by Sky in the ordinary course in 2018 and prior to the Effective Date. The price of £10.75 per Sky Share shall be reduced to the extent that:
- the dividend in respect of the six months ending 31 December 2017 exceeds 13.06 pence per Sky Share; and
- the dividend in respect of the year ending 30 June 2018 exceeds 21.8 pence per Sky Share.
· Sky will not pay any dividends in 2017.
· The Cash Consideration implies a value of approximately £11.7 billion for the fully diluted ordinary share capital of Sky (excluding the Sky Shares already owned by 21st Century Fox and its Affiliates).
· Commenting on the Acquisition, 21st Century Fox said:
"As the founding shareholder of Sky, we are proud to have participated in its growth and development. The strategic rationale for this combination is clear. It creates a global leader in content creation and distribution, enhances our sports and entertainment scale, and gives us unique and leading direct-to-consumer capabilities and technologies. It adds the strength of the Sky brand to our portfolio, including the Fox, National Geographic and Star brands."
"Sky is a creative, commercial, and consumer powerhouse delivering its own content to customers across all platforms. Sky is the #1 PayTV brand in all its key markets, with an exciting growth runway in each. The enhanced capabilities of the combined company will be underpinned by a more geographically diverse and stable revenue base. It will also create an improved balance between subscription, affiliate fee, advertising and content revenues. This combination creates an agile organization that is equipped to better succeed in a global market."
· Commenting on the Acquisition, Martin Gilbert, Deputy Chairman of Sky said:
"I am enormously proud that Sky is the number one premium pay TV provider in all its markets and is recognised as a world leading direct-to-consumer business. On top of this, the business has an outstanding track record of growth and has delivered substantial value for its shareholders over many years.
The Independent Committee, which was formed with the express purpose of protecting independent shareholders' interests in relation to the proposal from 21st Century Fox, has given full consideration to the fundamental value and prospects for the Sky Group.
While the Independent Committee remains confident in Sky's long-term prospects, as laid out in detail at our recent investor day in October, we, supported by our advisers, believe 21st Century Fox's offer at a 40 per cent. premium to the undisturbed share price will accelerate and de-risk the delivery of future value for all Sky Shareholders. As a result, the Independent Committee unanimously agreed that we have a proposal that we can put to Sky shareholders and recommend.
The Independent Committee also notes 21st Century Fox's track record in growing businesses and its ability to continue the development of Sky across Europe, in a world where entertainment and distribution are converging. 21st Century Fox's ownership will support the delivery of Sky's strategy and long-term growth, ensuring that it remains at the forefront of Europe's creative industries."
· It is intended that the Acquisition will be implemented by means of a scheme of arrangement under Part 26 of the Companies Act, further details of which are contained in the full text of this Announcement. However, 21st Century Fox reserves the right to implement the Acquisition by way of a takeover offer (as that term is defined under section 974 of the Companies Act), subject to the Panel's consent and the terms of the Co-operation Agreement.
· In view of the representation of 21st Century Fox and its Affiliates on the Sky Board, an Independent Committee of the Sky Board has been formed. The Independent Committee comprises six independent non-executive directors, Martin Gilbert (Deputy Chairman), Andrew Sukawaty (Senior Independent Director), Tracy Clarke, Adine Grate, Matthieu Pigasse and Katrin Wehr-Seiter, as well as two executive directors, Jeremy Darroch and Andrew Griffith, all of whom the Sky Board considers to be free from conflicts of interest with regard to the Acquisition. The members of the Independent Committee will act in accordance with their duties as directors and, in particular, in order to protect the interests of Sky Shareholders.
· The Independent Committee, which has been so advised by Morgan Stanley, PJT Partners and Barclays as to the financial terms of the Acquisition, considers the financial terms of the Acquisition to be fair and reasonable. In providing their financial advice to the Independent Committee, Morgan Stanley, PJT Partners and Barclays have taken into account the commercial assessments of the Independent Committee.
· Accordingly, the Independent Committee intends to recommend unanimously that Unaffiliated Sky Shareholders vote in favour of the Scheme at the Court Meeting and the Sky Shareholders vote in favour of the resolutions relating to the Acquisition at the Sky General Meeting, as each of the Independent Committee who own Sky Shares has irrevocably undertaken to do, or procure to be done, in respect of their own beneficial holdings of 913,299 Sky Shares representing, in aggregate, approximately 0.053 per cent. of the share capital of Sky in issue at close of business on 8 December 2016 (being the last Business Day before the start of the Offer Period. Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.
· The Acquisition will be subject to the satisfaction (or waiver) of the Pre-Conditions set out in Appendix 1, Conditions and certain further terms set out in Appendix 2 and the full terms and conditions which will be set out in the Scheme Document, including the sanction of the Scheme by the Court. The Pre-Conditions relate to the receipt of competition clearance in the EU, and, if either a European intervention notice or an intervention notice has been issued under sections 67 and 42 of the Enterprise Act 2002 respectively, approval of the Secretary of State, and the Conditions include, among other things, the approval of the Scheme by Unaffiliated Sky Shareholders and the sanction of the Scheme by the Court.
· The Scheme Document will include full details of the Acquisition and the Scheme, together with notices of the Court Meeting and the Sky General Meeting and the expected timetable, and will specify the actions to be taken by Sky Shareholders in connection with the Acquisition. It is expected that the Scheme Document will be despatched to Sky Shareholders no later than 28 days after the date on which the last of the Pre-Conditions to be satisfied (or waived) is so satisfied (or waived), save as otherwise agreed between Sky and 21st Century Fox with the consent of the Panel.
This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Acquisition will be subject to the Pre-Conditions set out inAppendix 1, the Conditions and certain further terms set out inAppendix 2 and to the full terms and conditions which will be set out in the Scheme Document. Appendix 3 to this Announcement contains a summary of the irrevocable undertakings received by 21st Century Fox in relation to the Acquisition. Appendix 4contains the sources of information and bases of calculation of certain information contained in this Announcement and Appendix 5contains definitions of certain terms used in this Announcement.
Analyst and investor call
21st Century Fox will host a conference call on 15 December 2016 to discuss the Acquisition. The call will begin at 8:00 a.m. ET.
Live teleconference dial-in numbers:
United States: (800) 230-1085
International: (612) 234-9960
Passcode: FOX.
Teleconference Replay dial-in numbers:
United States: (800) 475-6701
International: (320) 365-3844
Passcode: 412736
Subject to certain restrictions, the recorded call and the accompanying slides will be available to all interested parties at https://www.21cf.com/investor-relations/possible-offer-sky-plc.
Your attention is drawn to the important information at the back of this Announcement.