About time The Board started to see some sense.It's as I have...

About time The Board started to see some sense.

It's as I have been saying, Sky TV in her current form is never going to get a fair hearing as a listed business.

If she wants to remain a listed business she needs to rapidly transform into something bigger than a straight content aggregator (telco being the best choice, and achieved by merger).

If the Board can't (or won't) explore that, then they really need to work with their bankers to establish the best price to sell Sky for. Let the new owner make the required investments/transformations without the noise, speculation and general hubub of the markets eyeballing every tiny decision that is made.

So they are opting for the latter, good. Well, good so long as they are able to achieve a fair price. $500M is a great deal if it excludes the cash pile. If the best they can do is $500M all in, well that is a crappy deal for shareholders (a paltry 15% premium to the SP yesterday and only 8% higher than the SP now. And in fact 3% lower than the recent high of $2.93!!

So let's wait and see what they deliver. Vocus Group are supposed to be making some big announcement tomorrow - not sure if it relates to Sky.

But...

If it comes down to MIRA/Aware vs KKR (like it did with the tussle over buying Vocus Group) I do believe MIRA/Aware will win again.

And the reason is that Sky TV is worth more to them than to KKR.

KKR can buy it, strip out some more costs...invest some additional capital to speed up the turnaround etc, and I am sure they would ultimately be able to sell Sky later for more than they paid...but there are limits to that.

Consider Aware/Super on the other hand...

They currently own 2D which has a paper value of $1.7B after the 2D-VocusNZ merger. Let's say after operations are merged you have a $2B business there, but then what? How do you compete against Spark ($9B market cap) in a meaningful way? Unless they develop their own 'secret sauce' to differentiate their bundles from their competitors they will struggle to grow market share in a meaningful way (and will likely remain a $2B business).

Well, adding on Sky TV is an obvious way forward. And if they did a deal whereby they bought Sky for ~$500M (and let shareholders keep the cash) it is a no brainer if it allows 2D to grow substantially:

• If they were able to IPO 2D later for $3B then you could say Sky TV was 'worth' $1B to them and they got it half price
• More likely if they use Sky to grow a stickier customer base they would end up with an IPO of $4B+ in which case Sky was 'worth' $2B+ and they got an amazing deal

So my point is, MIRA/Aware can ultimately pay more for Sky than the likes of KKR and still end up getting a bargain.