Mergers and Acquisitions: Comcast's Takeover of Sky

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Finance

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Table of Contents
Strategic Narrative underlying the deal......................................................................................3
Price/Valuation of the deal from the perspective of shareholders in both companies...............5
Ability to realise revenue and cost synergies.............................................................................6
Financial Structure of the deal...................................................................................................6
Organisational / operational Challenges....................................................................................7
Regulatory issues.......................................................................................................................8
Agency Issues.............................................................................................................................8
Value Enhancement...................................................................................................................9
Reference List..........................................................................................................................10

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Strategic Narrative underlying the deal
Mergers and acquisitions play a vital role in the economic activity. Each year various type of
firms engage in a merger or acquisition. Specifically merger and acquisition activity
influences many employees because a worker whose organizations engages in M&As often
donot know what they will get after the company gets merged. Merger can increase the
uncertainty of employees to a significant stage.
Some analyst say that Comcast which owns US broadcaster NBC Universal after acquiring
Sky, has found the path for expansion in worldwide. The satellite broadcaster has expanded
into broadband and phone services. It has started producing original content which includes
movies and also news programming. It holds broadcasting rights to sports in Europe, and
main focus is on soccer. In UK , Sky mainly sells wireless and fixed-line internet services
under wholesale agreements. Comcast has expanded Sky’s broadband reseller strategy into
more European markets. In countries such as the UK, Germany, Italy, Austria and Ireland,
various streaming services and pay TV are operated by Sky. It also runs a streaming service
in Spain. There has been a signal from both the sides of executives from sky as well as
Comcast signalling no radical changes to take place. Comcast is trying to support the sky for
further growth. Technology transfer as well as other kinds of expertise between Comcast in
sky which has the capability of pushing over the top level of innovation by the means of scale
in content and technology. In a recent presentation related to investors, Comcast claimed
about planning to reshape and grow. The content investment of sky include the rise in the
number of Originals and maintenance of its top position in cinemas and sports.
A 22 million pound bid for the company Sky was submitted by the media group of the United
States, Comcast (CNBC, 2018). This submission bid prompted the organisation for dropping
it's over all support towards a lower offer from the business head of 21st Century fox, Rupert

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Murdoch. The bid of 12.5 pounds per share of Comcast was openly welcomed by the
independent directors of Sky. The directors stated that the organisation now would be
engaging with both Fox as well as Comcast. The shareholders of Sky were warned by the
directors regarding none of the bids being able to be put forward to them and hence they were
advised for not taking any kind of action. An offer which was made previously and had put
pressure on Fox that had already taken 39% stake of the company was formalized by the bid
(The Guardian, 2018). The cash offer of 10.75 pound per share was to be raised by such a
bid. Sky claim to have considered all of its available options and remained committed
towards the offer. Several issues of concerned rose due to the deal between 21st Century fox
and sky regarding the influence held by Murdoch over the opinion of public by the means of
owning the British newspapers including The Sun and The Times as well as all the
broadcasters. Further complications were made to the proposed combination due to the
agreement of Fox for selling most of its film and Television assets to the Walt Disney
Company. This agreement also included the stake of 21st Century fox in Sky which was price
at 52 billion dollars (Comcast, 2019). There was no immediate reply given by Disney towards
the request.
The commitments of the United States cable giant Comcast were welcomed by sky. These
commitments were related to addressing the potential concerns of the public interest
regarding Sky News which was the organisation's significant 24 hour news channel.
According to the chief executive and chairman of Comcast, Brian Roberts, the withdrawal of
the recommendations of sky was exactly what the company was looking for which it aimed at
achieving by the means of formalizing its offer (Reuters, 2018). The reporters were informed
by him that much emphasis was to be provided on the shareholders which was confirmed by
the board. Murdoch's son James, played a very important role in building the organisation
into a giant European broadcasters which head operations with several countries such as Italy,