Sky Network share price tumbles 6% on acquisition news

The potential acquisition would expand Sky's presence in radio and outdoor advertising.

| More on:
A man pointing a remote towards a TV whilst covering his eyes

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Sky Network share price is falling on potential MediaWorks acquisition
  • The company remains highly uncertain whether the deal will proceed
  • The Sky Board believes the acquisition would deliver improved returns for shareholders

The Sky Network Television Limited (ASX: SKT) share price is tumbling in morning trade, down 6.3%.

Sky Network shares closed yesterday trading for $2.38 apiece and are currently at $2.23.

The early morning selling comes after the dual-listed, New Zealand-based satellite TV provider confirmed media speculations over a potential acquisition.

What acquisition is in the pipeline?

The Sky Network share price has come under pressure after the company confirmed recent speculation that it is in exclusive negotiations to acquire MediaWorks Holdings Limited's radio and out-of-home advertising business.

Rumours began to circulate when Sky Network last month said it would hold off releasing any additional capital allocation and strategy updates until reporting its full-year financial results in August with an eye on "investment opportunities".

MediaWorks radio networks include Today FM, Mai-FM, The Rock, and The Edge. The company is privately owned by Oaktree Capital Management and Quadrant Private Capital.

Sky Network stated: "The likelihood of a transaction proceeding is still highly uncertain with discussions and due diligence ongoing and incomplete."

The company said that should the acquisition of Mediaworks proceed, it would not need to raise additional equity. However, the deal would need to be approved by an ordinary resolution by shareholders at an extraordinary shareholder meeting.

When it reported its half-year results on 24 February, Sky said it was "assessing opportunities to invest capital to accelerate the growth of the business, generate new revenue streams, and deliver improved returns for shareholders".

Today the company's board said it believes acquiring MediaWorks is in line with that strategy.

Sky Network share price snapshot

Following some difficult years, the Sky Network share price has rebounded over the past 12 months, up 44% despite this morning's retrace. That compares to a 1% full-year loss posted by the All Ordinaries Index (ASX: XAO).

The company has a market cap of $403 million.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Mergers & Acquisitions

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Mergers & Acquisitions

IAG share price lifts off on strategic alliance approval

IAG shares are racing higher in Thursday’s sinking market.

Read more »

a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.
Mergers & Acquisitions

This ASX 300 share is sinking 33% on takeover collapse fears

Is this takeover dead? Let's find out what is happening.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Mergers & Acquisitions

Why is this ASX 200 stock crashing 15%?

What has sent investors rushing to the exits? Let's find out.

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

Guess which ASX All Ords stock just received a takeover offer

A private equity firm has its eyes on this stock.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX stock just rocketed 21% on takeover news

Investors are piling into the ASX stock following a confirmed takeover offer.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Gold Road shares surge 10% on $3.7 billion takeover offer

The ASX 200 gold stock is soaring after finding itself in the acquisition crosshairs.

Read more »

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »