Last week, 21st Century Fox confirmed that it had made a formal proposal to Time Warner in June to combine the two companies, a bid that has been valued at $80 billion. In order to lodge a higher bid for Time Warner, Fox is reportedly looking to sell Sky Italia and its 57% stake in Sky Deutschland to BSkyB, which Fox owns a 39% stake in, within the next two weeks.
The assets that Fox would be selling have been valued at around €10 billion. Quoting people familiar with the matter, it also says that no final decision has yet been made on whether to increase Fox’s offer for Time Warner. The proceeds could give Murdoch additional cash for a Time Warner bid without having to borrow more.
While Fox is willing to pay more than $75 billion after Time Warner’s board rejected its $85 per-share bid, no final decision has been made on whether to bump the offer. JPMorgan & Chase, the biggest U.S. bank by assets, and Goldman Sachs Group, the fifth-biggest, will help Murdoch finance the bid.
A deal with New York-based Time Warner would reshape the media industry by giving Fox more clout in negotiations with pay-TV providers, which are pursuing their own mergers to build scale. Comcast agreed to acquire Time Warner Cable and AT&T struck a deal to buy DirecTV in recent months, the two largest acquisitions of 2014. A Fox deal for Time Warner would trump both in size.
The deal would give BSkyB, already the biggest pay-TV provider in the U.K., oversight of companies that sell satellite and cable programs to 8.5 million homes across Germany and Italy. By shedding the continental units, Fox would be left with cable and broadcast networks plus movie and TV studios, making it more attractive to investors who want to bet solely on video production, not distribution. Read more about this story here.
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