Investor's rejection imperils 'Sky Europe' pay-TV giant

Crispin Odey, who manages the hedge fund that's the second biggest investor in Sky Deutschland, and who is also the former son-in-law of Fox chief Rupert Murdoch, has rejected a deal that would create the biggest pay-TV operator in Europe.

According to The Daily Telegraph, Odey--overseer of the Odey Asset Management fund, Sky Deutschland's second biggest shareholder next to Murdoch's 21st Century Fox, owning about 8 percent of the pay-TV company--believes the deal "undervalues" his hedge fund's Sky Deutschland shares at $9.09 per, and he doesn't want to sell them at that price.

Last week, the U.K.'s BSkyB, which is controlled by Fox, announced a deal to buy Fox's 57 percent stake in Germany's Sky Deutschland, as well as a 100 percent stake in Italy's Sky Italia.

The $9 billion mostly cash transaction would create, pending regulatory and shareholder approval, "a world-class multinational pay-TV business," in the words of BSkyB executives, with more than 20 million subscribers spread across Germany, Italy, Austria, the U.K. and Ireland.

Murdoch, meanwhile, would acquire much-needed cash for his primary goal--to buy Time Warner Inc. in the U.S., which will have a price tag in excess of the initially rejected bid of $80 billion.

But Odey told The Daily Telegraph that while Sky Deutschland was already an expensive stock, he believes that it was "undervalued on a three-year basis" given the growth of the German TV market. Sky Deutschland is the biggest pay-TV operator in Germany, which is the largest market in Europe.

As the Telegraph noted, BSkyB has not set a minimum acceptance in its Sky Deutschland offer. And the British operator had emphasized that it does not need 100 percent control of the company to accomplish what it wants from the deal. With a 57 percent stake, BSkyB can select Sky Deutschland's board members and control the company's divident policy.

The London-based Odey used to be married to Murdoch's daughter Prudence and reportedly still maintains an amicable relationship with the Fox chief. 

For more:
- read this report from The Daily Telegraph
- read this Variety story

Related links:
BSkyB buys Murdoch's German and Italian stakes, creates Euro pay TV giant
Murdoch bidding on Time Warner Inc. could reach $91B, analyst says
BSkyB in talks with 21st Century Fox for German, Italian pay-TV assets