[SatNews]  British Sky Broadcasting (BSkyB) has agreed to buy Sky Deutschland and Sky Italia from 21st Century Fox for a total of GBP 4.9 billion cash.

The deal creates a new business, already dubbed ‘Sky Europe’  that will be the leading payTV provider in three of Europe’s four biggest markets, serving a total of 20 million customers. The news comes two months after BSkyB said the firm was in talks with Fox, which is its biggest shareholder, as well as the owner of Sky Italia and 57.5 percent of Sky Deutschland. BSkyB will pay for the deal with cash, debt and by a placing of shares that represents around 10 percent of the firm's issued share capital.

In total, BSkyB confirmed it would pay GBP 2.45 billion for Sky Italia and GBP 2.9 billion for Fox's majority stake in Sky Deutschland. The payment for Sky Italia will also include BSkyB's stake in the National Geographic Channel, valued at GBP 382 million. In addition to the enhanced growth profile of the business, BSkyB expects to realize GBP 200 million of run-rate cash synergies by the end of the second full financial year after completion, with further additional synergies to come in subsequent periods.

Although the three companies already worked closely together, BSkyB CEO Jeremy Darroch was keen to stress the new synergies resulting from the merger. "This transaction will create a world-class, multinational payTV business with enhanced headroom for growth and immediate benefits of scale," he said, going on to add that "the three Sky businesses are leaders in their home markets and will be even stronger together."

Fox will maintain the same 39 percent stake in the newly merged company as it currently has in BSkyB, the aim being to avoid any potential political and regulatory concerns over media plurality. The proceeds of the deal will give Fox additional cash for another Time Warner bid without having to borrow more. Earlier this month Time Warner rejected a USD 80 billion offer from Fox as too low, but Rupert Murdoch’s company is expected to continue in its attempt to create the world’s largest media content owner.