Discovery Communications is to acquire Scripps Networks Interactive in a cash-and-stock transaction worth $14.6 billion, or $90 per share, based on Discovery’s Friday, July 21 closing price.
The purchase price represents a premium of 34% to Scripps’ unaffected share price as of Tuesday, July 18, 2017, and the transaction is expected to close by early 2018.
Commenting on the development, David Zaslav, president and CEO, Discovery Communications, said: “This is an exciting new chapter for Discovery. Scripps is one of the best run media companies in the world with terrific assets, strong brands and popular talent and formats. Our business is about great storytelling, authentic characters and passionate super fans. We believe that by coming together with Scripps, we will create a stronger, more flexible and more dynamic media company with a global content engine that can be fully optimised and monetised across our combined networks, products and services in every country around the world”.
Kenneth W. Lowe, chairman, president & CEO, Scripps Networks Interactive, is expected to join Discovery’s board of directors following the close of the transaction. He added: “Through the passion and dedication of our incredible employees, and with the support of the Scripps family, we have built a lifestyle content company that touches the lives of consumers every single day.
“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.”
Scripps shareholders will receive $90 per share under the terms of the agreement, comprised of $63.00 per share (70%) in cash and $27.00 per share (30%) in Class C Common shares of Discovery stock, based on Discovery’s Friday, July 21 closing price.
The cash portion of the purchase price will be financed with a combination of new debt and cash on hand. Discovery has secured fully committed financing from affiliates of Goldman Sachs & Co. LLC to fund the acquisition. Discovery expects to maintain investment grade ratings throughout this transaction.
This purchase price implies a total transaction value of $14.6 billion, including the assumption of Scripps’ net debt of approximately $2.7 billion. Post-closing, Scripps’ shareholders will own approximately 20% of Discovery’s fully diluted common shares and Discovery’s shareholders will own approximately 80%. This calculation is based on the number of Discovery shares outstanding today (July 31).
