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BSY’s European Drive

25 July 2014 by HCM

Following weeks of speculations that drove its risk premium up and down over the last couple of months, BSY (British Sky Broadcasting Group Plc) eventually announced this morning the proposed acquisition of Fox’s 100% stake in Sky Italia and an offer for Fox’s 57.4% stake in Sky Deutschland. This was largely anticipated by the market. But the good news from a credit perspective was twofold. First the price paid for the assets came in at the low end of analysts’ expectations. Second, BSY announced the issuance of 156m new shares, for a total consideration of £1.4bln, which will significantly improve the balance sheet position. Together with the recent sale to Liberty Global of their 6.4% stake in ITV for £480mln, it will secure the investment grade status of the company going forward. The market shown its appreciation through a 30bps tightening of the 5 year CDS.