One of the better known British head fund managers has stated that he will fight any attempt by BSkyB to push through what he believes to be a “nil-premium takeover.” The statement came with the understanding that the pay-TV operator was in late talks with 21st Century Fox which is the largest shareholder in the three companies it hopes to unite: BSkyB, Sky Italia, and Sky Deutschland AG (FRA:SKYD) (ETR:SKYD).
It does make sense for BSkyB to own Sky Deutschland
“While it makes quite a lot of sense for BSkyB to own Sky Deutschland AG (FRA:SKYD) (ETR:SKYD), because a lot of its technology and knowhow has come straight from Sky, a nil-premium merger that massively undervalues the company does not make sense for minority shareholders,” Mr Odey said.
“We are minded to fight, and other shareholders in Sky Deutschland should be involved in the debate over how this company is going to grow.”
Following confirmation of the talks by BSkyB yesterday, shares in Sky Deutschland AG (FRA:SKYD) (ETR:SKYD) gained nearly 10% which pushed the value of Mr. Odey’s 8% to roughly €440m while BSkyB fell 2.4%.
Opposition to the deal is nothing new to Odey who opposed a buyout of minority shareholders in 2011. That deal was ultimately stopped when the UK phone hacking scandal broke.
Fox currently owns 39.1% of BSkyB, 57% of Sky Deutschland AG (FRA:SKYD) (ETR:SKYD), and the entirety of Sky Italia. The deal if it went through would see BSkyB acquiring 21st Century Fox’s fully diluted 57% with an obligation to make an offer for minority shares.
“BSkyB would expect, subject to German minimum offer price rules, to make this offer without a premium,” the company said.
In a statement on Monday, Fox said: “Over the years we’ve had numerous internal discussions regarding the organisational and ownership structure of the European Sky-branded satellite platforms. From time to time these conversations have included BSkyB, however no agreement between the parties has ever been reached.”
Certainly on the surface this represents a conflict of interest and this fight has just begun.