Comcast gets ready to welcome Sky into the family

Bringing a long-drawn saga almost to an end, Comcast Corp. (CMCSA) outbid 21st Century Fox (FOXA) for the ownership of European pay-TV provider Sky plc. The bidding process, which took place on Saturday, was a rare one as auctions are seldom a part of acquisition deals. Comcast put forth a final bid of $22.65 a share which amounts to $40.1 billion.

Sky’s independent committee recommended the acceptance of Comcast’s offer. The deadline to do so for the board and shareholders is October 11. Comcast is looking to close the deal by the end of October.

Sky has a considerable presence in Europe with a large customer base and provides Comcast with good expansion opportunities as well as chances to strengthen its position against digital competitors like Netflix (NFLX) and Amazon (AMZN).

Fox is yet to decide its course of action with regards to its existing stake in Sky

Through its combination with Sky, Comcast can broaden its customer base to over 50 million and increase its share of international revenue to more than 20%. The company also has opportunities to generate a significant amount in terms of synergies as well as pay down debt considerably. The partnership will also enrich Comcast’s content trove.

Comcast’s rival Fox already owns a 39% stake in Sky, which is part of the asset base that Walt Disney (DIS) has agreed to acquire. Fox is yet to decide its course of action with regards to this stake in Sky although there are talks that Disney might choose to sell it and focus on Hulu.

Since Disney, Fox, and Comcast share the majority ownership of Hulu, there are speculations on the possibility of an exchange. There is no official confirmation on this matter. Meanwhile, some concerns have cropped up over the high price that Comcast has promised, and the company must now prove to investors in the coming months that this was indeed a right move, especially during a time of increased cord-cutting.

Comcast lets go of Fox; wants to pursue Sky