Rupert Murdoch’s 21st Century Fox has boosted its bid for Sky, raising the stakes for Comcast to retaliate in a battle for control of Britain’s top pay-television company.
Fox offered £14/share to value Sky at £24.5-billion (R438-billion), 12% more than Comcast’s rival £22-billion offer. Sky shares fell as much as 2% as some investors had expected a higher counter from Fox, but are still trading above the latest Fox bid.
“They’re way behind the curve still,” said Crispin Odey, founder of Odey Asset Management, which owns shares of Sky. “I think it will go at about £18.”
Now it’s up to Comcast to respond. Sky is a pawn in a wider contest between Comcast and Walt Disney for the bulk of Murdoch’s media empire, as the US media giants try to take on powerful digital rivals like Netflix. Murdoch has a deal to sell Fox’s entertainment assets including its Sky stake to Disney, though Comcast is weighing another bid for the Fox portfolio.
Sky shares traded at £14.90 as of 9.55am in London.
The clock was ticking on Fox to make a higher bid for Sky, because Comcast faces a deadline of Friday to formally deliver its offer documents to shareholders of the London-based company, under UK takeover rules.
The expectation from some analysts had been that Fox would wait for final UK approval before coming back with a higher bid, but with Prime Minister Theresa May’s government committing to release a decision on Thursday, Fox pulled the trigger.
A spokesman for Comcast declined to comment on how the company will respond.
The UK government has already said it’s likely to approve Fox’s bid for Sky after Fox satisfied concerns over media plurality. Britain’s former culture secretary Matt Hancock, who was replaced on Monday night with Jeremy Wright in a cabinet shake-up, had said he was willing to let the takeover go ahead, provided Fox sold Sky’s 24-hour news channel to Disney.
Bidding war
Fox first went after the 61% of Sky it doesn’t already own in December 2016, offering £10.75/share, but was held up over concerns that the tie-up would give Murdoch too much influence over Britain’s media.
Comcast tabled a proposal of £12.50/share for Sky in February, and Sky’s stock has traded consistently above the Comcast offer as investors anticipated Fox or Disney would come back with more.
Sky’s independent directors accepted the latest Fox offer.
“We welcome this increased offer,” Martin Gilbert, deputy chairman of Sky, said in an e-mailed statement. “This offer reflects the strong position the business is in and is an attractive premium for shareholders.”
Sky gives Fox and Comcast a rare opportunity to diversify out of the US and reach more consumers directly. Sky has 23 million customers in five European countries and also boasts a market-leading platform, its Q box, and a suite of premium TV content to lure and retain subscribers, including rights to Premier League soccer. Of the assets he’s seeking to acquire from Fox, Disney CEO Bob Iger called Sky “a real crown jewel”. — Reported by Joe Mayes, (c) 2018 Bloomberg LP
