Rupert Murdoch's media empire 21st Century Fox has struck a mega deal with British satellite television group BSkyB to create a pan-European pay-TV giant.
BSkyB, 39-per-cent-owned by 21st Century Fox, said it had agreed to buy Fox's 100-per-cent stake in Sky Italia and its 57.4-per-cent interest in Sky Deutschland.
The new project, named "Sky Europe" by observers, is seen as a bid by media mogul Murdoch to strengthen his European television operations as the telecommunications sector enters the market to screen live football matches featuring some the world's biggest clubs.
Analysts said the deal would give 21st Century Fox an opportunity also to make a renewed bid for rival Time Warner.
BSkyB said it planned to acquire the rest of Sky Deutschland from the German group's minority shareholders, creating a pan-European TV giant in deals that could cost the British group up to STG7.0 billion ($A12.8 billion).
The London-listed company will pay for the transaction with existing cash resources, debt, and a placing of new shares which successfully raised STG1.36 billion on Friday.
The placing comprised almost 10 per cent of BSkyB's stock.
BSkyB added that it would also suspend its share buyback program with immediate effect.
"The enlarged company will be a world-class multinational pay TV provider that serves 20 million customers and brings together the leading pay TV businesses in three of Europe's four biggest markets," BSkyB said in the statement.
James Murdoch, the co-chief operating officer at 21st Century Fox, said "a combination of the European Skys would create enormous benefits for the combined business and for our shareholders".
Shares in BSkyB slumped 5.46 per cent to close at 874.5 pence on London's benchmark FTSE 100 index, which finished 0.44 per cent lower on Friday.
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