The big news of 2014 when it came to Sky was that seeing growth slow in the United Kingdom, they would take over Sky Italia and Sky Deutschland to give them a presence not just in the UK, but across Europe too. At the time, it was mooted this deal would cost £4.9 billion in cash. In return, Sky would acquire 100% of Sky Italia, which was owned by 21st Century Fox and approximately 57.4% of interest in Sky Deutschland stock.
Under the rules of the German Stock market though, Sky also had to offer their share purchase price to minority share holders too. At the time, Sky believed that many minority shareholders would keep hold of their stock, and had publicly stated that they were more than happy with the controlling stake they were taking in the company. However, it was soon revealed that a huge number of the minority shareholders were happy to cash in, and Sky would take 87% of all shares in the German company.
Spotting an opportunity, Sky kept their offer open to the remaining shareholders and by the start of this year, they had scooped up more than 95% of all shares, leaving just 4.2% in free float on the Frankfurt Stock Exchange.
In the background to all of this, Sky have been doing an immense amount of background restructuring, consolidating teams across Europe, laying off many members of staff and rebuilding a company in the image of their UK enterprise. This new company, far from making a loss like it had for many years, is now turning a solid profit and growing considerably, making Sky's announcement that they've now taken 100% of all shares in the company even better news.
With Sky Italia and Deutschland now firmly in hand, Sky has consolidated its position as Europe's leading entertainment company, and with 100% ownership of both companies it can now take full advantage of growth opportunities across their five territories. Sky are also in line to benefit from the expertise of the highly talented people who have been working within Italia and Deutschland, whose expertise can now be leveraged in the UK business.
Sky estimate that there are 65 million households within their territories which haven't yet taken up pay TV. Although that number doesn't take into account poverty or a lack of demand, it still presents an incredibly potential for growth for the company. The sheer size of Sky now also means that they can negotiate much harder with content providers in the knowledge that they'll be reaching a much greater audience than ever before, hopefully keeping customers from the Sky cancellation hotline.
On the deal, Jeremy Darroch, Sky’s Group Chief Executive said: “The full acquisition of Sky Deutschland is the latest step in creating an even stronger business for the future. The opportunity ahead is substantial and we have a strong platform on which to build and deliver benefits for customers and shareholders alike.”
With all shares now purchased, Sky intend to take Sky Deutschland AG off the Frankfurt Stock Exchange and keep it unlisted. With a presence now in the UK, Ireland, Germany, Austria and Italy, Sky has an annual revenue of over £11 billion and a combined programming budget of over £4.9 billion and over 30,000 employees.
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