Sky Network Television taps Jarden as bid lands

afr.com:

Dual-listed pay-TV provider Sky Network Television has brought in its long-time adviser Jarden, after receiving a non-binding indicative offer from a mystery international bidder.

Sky Network makes most of its revenue from Sky Box subscriptions, which are usually sold on six- or 12-month contracts and paid in monthly instalments. AFR

Sources said the bidder has hired Rothschild’s bankers to advise it on the tilt. Sky disclosed the approach in its exchange filings on Friday morning, citing it as the reason for the pause in its buyback.

However, Sky did not disclose the price. That’s unheard of if the company is still considering the NBIO and hasn’t rejected it yet.

It comes after Street Talk spotted at least two private equity firms kicking tyres at Sky last year.

In a research flash note mailed out to clients this morning, Forsyth Barr analysts Aaron Ibbotson and Matt Montgomerie said they expected Sky to fetch a “meaningful bid-premium”.

“SKT currently trades on a 12 month forward PE of ~6.5x, a ~-25% discount to its five year history and an EV/EBIT of ~4.5x, a ~-26% discount to its five year average; it is one of the lowest valued stocks on the NZX,” the duo wrote.

“More importantly, for a potential financial buyer we estimate that it is valued on a FY25 FCF yield of ~10% which makes it possible for a private equity buyer to offer a meaningful premium to the undisturbed price and still use leverage even in today’s high interest rate environment.”

The company has a $NZ358 million market capitalisation. Sky last traded at $2.33 a share on the ASX after gaining 10.95 per cent year to date.

More to come