Rupert Murdoch’s Twenty-First Century Fox Inc. (NYSE: FOXA) intends to buy U.K.-based satellite content company Sky and then pass it on to Walt Disney Co. (NYSE: DIS) in a sale of most of Fox’s assets. Comcast Corp. (NASDAQ: CMCSA) means to upset those plans. It offered $31 billion for Sky today.
The Disney offer for Fox assets has been valued at $52.4 billion
The U.S. cable and entertainment company disclosed:
Comcast Corporation today published a Rule 2.4 announcement (under the City Code On Takeovers And Mergers (the “Code”)) regarding a possible offer which is a superior cash proposal to acquire Sky. Sky is a leading consumer entertainment company in Europe, providing exceptional entertainment and communications services primarily in the UK, Germany, and Italy.
Comcast’s announcement of a superior cash proposal of £12.50 per share represents a 16% increase in value over the existing 21st Century Fox offer for Sky. Comcast’s superior cash proposal implies an equity value of $31bn (£22bn) for Sky.
A combination would bring attractive financial benefits to Comcast shareholders, and is expected to be accretive to Comcast’s free cash flow per share in year one.
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Comcast currently has its major operations concentrated in the United States. These include its Xfinity cable and broadband business, NBCUniversal, which has entertainment and news assets, and a division that offers enterprise broadband services to businesses. The concentration of businesses within the United States may be a primary driver of the Comcast decision.
In 2017, Comcast had revenue of $84.5 billion, up 5.1% from 2017. Earnings adjusted for income tax changes in 2017 rose 18% to $2.06 per share. Cable revenue was $52.5 billion for the year. NBCUniversal revenue was $33 billion. Sky would make Comcast a multinational company for the first time.
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