The Boards of Sky and Amstrad have announced that they have agreed the terms of a recommended cash offer to be made by Sky Digital Supplies, a wholly-owned subsidiary of Sky, for the entire issued and to be issued share capital of Amstrad.

The offer is 150 pence in cash for each Amstrad share, valuing the entire issued share capital of Amstrad at approximately £125m.

The offer represents a premium of approximately 23.7 per cent. to the closing price of 121.25 pence for each Amstrad share on 30 July 2007, the last business day prior to the date of this announcement.

A Loan Note Alternative is being made available to Amstrad shareholders who validly accept the offer on the basis of £1 in nominal value of Loan Notes for each £1 of cash consideration.

In its capacity as a major supplier to the Sky Group, Amstrad currently designs and develops set-top boxes to the Sky Group’s specification and then contracts out the manufacturing to specialists in electronics manufacturing services. In the financial year ended 30 June 2007, Amstrad supplied approximately 30 per cent. of the set-top boxes purchased by the Sky Group and Sky believes that the Sky Group accounted for approximately 75 per cent. of Amstrad’s revenues.

The acquisition of Amstrad will provide Sky with an in-house design and development capability, which Sky believes will deliver significant operational and financial benefits and enable the Sky Group to source some of its products directly from specialist electronics manufacturers. 

Commenting on the Offer, Sky's Chief Executive Officer, James Murdoch, said "Sky and Amstrad have had a long and positive relationship. The acquisition accelerates supply chain improvement and will help us to drive innovation and efficiency for the benefit of our customers."

Commenting on the Offer, Amstrad's Chairman and Chief Executive, Sir Alan Sugar, said "Amstrad has worked closely with Sky for many years and I cannot imagine a better home for the Amstrad business and its talented people. Our companies share the entrepreneurial spirit of bringing innovation to the largest number of customers. Sky is a great British success story. I’m proud to have worked so closely with it, and I look forward to continuing to play a part in this exciting business."