Bidding war for Sky could end in auction
U.K. panel may rule on offers by Fox and Comcast
A protracted US$34 billion bidding war for European broadcaster Sky between U.S. rivals Comcast and Twenty-First Century Fox is likely to be settled by a quick-fire auction on Saturday.
Britain’s Takeover Panel, which regulates merger and acquisition activity, said on Thursday it was preparing to take the rare step of intervening in the battle for London-listed Sky by running an auction for the pay-television business that lasts for a maximum of three rounds.
The process will start if Comcast or Rupert Murdoch’s Fox, which has the backing of partner Walt Disney, are still competing for Sky by 5 p.m. London time on Friday, the Panel said.
The auction will take place the following day in private and is slated to finish during the evening, when the regulator will announce the level of the bids submitted by the suitors.
It would mark a dramatic resolution of Sky’s fate, which has been up in the air ever since Fox made its first bid for the 61 per cent of Sky that it does not already own in December 2016.
Fox’s takeover was held up by prolonged regulatory scrutiny of the proposed deal and was then gatecrashed by cable giant Comcast earlier this year.
Comcast currently leads Fox with a 14.75 pound a share offer for control of the pay-TV group that values it at US$34.2 billion and has been recommended to investors by Sky’s independent directors.
That trumped the 14 pound a share offer made by Fox earlier in July and is 37 per cent above Fox’s original 10.75 pound a share bid in 2016.
“Shareholders will be delighted at how this has all played out, having seen the share price double since just before the original offer was made by Twenty First Century Fox almost two years ago,” said Laith Khalaf, a senior analyst at Hargreaves Lansdown.
British hedge fund manager Crispin Odey, whose firm is a shareholder in Sky, has previously said the company should be valued at a minimum of 18 pounds a share.
“We still have the ability at the end of it to say no, sorry, you still haven’t bid enough,” he told Reuters on Thursday.
Fox is vying for the broadcaster with the financial support of Disney, which in June agreed a separate deal to buy TV and film assets from Fox, including its existing 39 per cent Sky shareholding, for about US$71 billion.
The fight for the company is part of a bigger battle being waged in the entertainment industry as the growth of Netflix and Amazon force the world’s traditional media giants to spend tens of billions of dollars to keep pace.
Sky was formed in 1990 when Murdoch merged his fledgling British satellite TV service with a rival, and is a broadcaster of sports, films and TV shows.
An auction for Sky, which broadcasts to 23 million households across Europe, would be the biggest ever deal in the UK to be decided by a panel-run auction.
There have only been three British takeover situations since 2007 in which the regulator has run auctions, including the 6.2 billionpound sale of Anglo-Dutch steelmaker Corus to India’s Tata Steel, according to analysis by Reuters.
The last time the Panel invoked the procedure was in 2012 when it almost intervened in the battle for Cove Energy until Royal Dutch Shell abandoned its takeover attempt and let Thailand’s PTT Exploration & Production clinch a US$1.9 billion deal for the gas explorer just before an auction began.