France's Vivendi Considers Bid for Sky (Report)
The deal could cost the Canal Plus owner up to $42 billion and create a pan-European pay TV behemoth.
Vivendi is considering a possible acquisition of the U.K. pay TV giant as one of a number of options to grow the reach of its own TV company Canal Plus, Reuters reported on Tuesday.
The giant French media conglomerate, which also owns Universal Music Group, is looking at Sky after evaluating other, smaller European pay TV companies, particularly in fast-growing markets like Turkey, according to three sources familiar with the strategy who spoke to Reuters.
Sky, which has operations in Germany, Italy, Ireland, Austria as well as the U.K., has 20 million subscribers and is particularly strong in live sports, with rights to the phenomenally successful, if expensive, English Premier League.
According to the report, Vivendi is still weighing any offer, with deliberations still at an early stage, and neither the management of Sky or Rupert Murdoch's 21st Century Fox, which has a 39% stake in the U.K.-based pay TV group, have been approached.
The cost of any prospective Vivendi takeover would be high, with sources suggesting a 25 percent premium on Sky's current share price, leading to a bid somewhere in the region of $42 billion, which includes debt that stood at $9.41 billion at the end of last year. Sky's current market value is $26 billion.
Cash-rich Vivendi has been disposing of a number of non-core assets in recent years, including selling its stake in French telecoms group SFR and video games company Activision Blizzard. The Reuters report suggests that Vivendi could have as much as $16.3 billion in cash after it completes a series of deals and disposals.
The French company, led by billionaire Vincent Bollore, is looking to use its cash pile to grow its Canal Plus pay TV operation to become a pan-European giant. Vivendi is also looking at smaller digital media deals to diversify its portfolio and the company made a $236 million offer for 80 percent of Paris-based video site Dailymotion on Tuesday.