Discovery Communications announced on Monday, July 31, that it would be acquiring Scripps Networks Interactive in a deal that will slightly surpass the value of $11 billion. According to reports, through this acquisition-merger, the companies will be trying to better adapt to the changing television landscape and the viewer preferences.
The Scripps Acquisition Will Be of Around $90 a Share, $11.9 Billion in Total
Reports state that Discovery will be buying Scripps for a value of around $90 a share. It will also be assuming a long-term debt of $2.7 billion. According to the statement released on Monday, this will bring the final, total price of the equity value and the liabilities to a value of $14.6 billion.
News about the two companies being in talks first broke on July 18. At the time, Scripps’ closing price was of $67.02. The total acquisition price makes up a 34 percent premium over this value.
“This agreement with Discovery presents an unmatched opportunity for Scripps to grow its leading lifestyle brands across the world and on new and emerging channels including short-form, direct-to-consumer, and streaming platforms,” stated Kenneth W. Lowe in the statement.
He is the Scripps Chief Executive Officer. According to reports, the company’s talks with Discovery determined Viacom Inc. to abandon its acquisition talks with Scripps.
According to the Monday statement, combining Discovery with Scripps will come to represent almost 20 percent of all the ad-supported pay TV viewership in the United States. Some suggest that the acquisition might also help Discovery Communications raise its international sales. Currently, this accounts for around half of the company’s annual revenue.
The Tennessee-based Scripps already owns an interest in TVN, the Polish TV operator, and it is also expanding the HGTV to new countries. This is a home improvement channel which broadcasts hits such as the Fixer Upper and Property Brothers. These and others have made HGTV one of the most popular cable networks.
Before the official start of trading and after the news, Scripps’s shares increased by 1.3 percent and reached $88 in New York.
This acquisition will be combining two companies that specialize in the so-called unscripted programming. It focuses on travel, wildlife, real-life adventure, and the home. The merger is expected to save around $350 million in costs as well.
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