Comcast digs deep to overcome Fox with $39bn bid for Sky
London, UK - Comcast Corp overwhelmed 21st Century Fox Inc in a bidding war for Sky Plc, offering US$39bn in a move that puts it on track to acquire Europe’s largest satellite broadcaster.
In an rare auction overseen by UK regulators, Comcast bid ten per cent more than Fox on Saturday, all but ensuring that it will win control of London-based Sky. Should Comcast complete the transaction, chief executive officer Brian Roberts will have a chance to build a global television giant, helping stave off the threat from Netflix Inc.
The outcome marks a victory for the 59 year old cable magnate after a string of M&A setbacks. Roberts, who spent Saturday in a London hotel orchestrating the auction, had previously tried to acquire the bulk of Fox - only to be outbid by Walt Disney Co.
“This is a great day for Comcast,” he said in a statement. “Sky is a wonderful company with a great platform, tremen- dous brand and accomplished management team.”
Comcast’s emergence as the winner helps put an end to months of uncertainty over the future ownership of the TV company Rupert Murdoch founded in 1989. Independent directors at Sky have recommended accepting Comcast’s offer, and investors have until October 11 to tender their shares.
The question now is whether Comcast paid too much. Investors have already expressed concerns about its M&A ambitions this year, sending its shares down more than five per cent. Comcast’s final bid of £17.28 a share was well above the £15.67 offered by Fox.
Another shadow over the deal: Whether Fox will agree to sell its 39 per cent stake in Sky to Comcast. People familiar with the matter said that Fox was mulling tendering the stake if Disney supports the move. The company said in a statement on Saturday that it was still ‘considering its options and will make a further announcement in due course’.
Bloomberg Intelligence analyst Paul Sweeney said he expects that Fox will capitulate. “I can’t imagine they want to be a minority shareholder in this,” Sweeney said. “It’s a very bold price.”
The sweetened bid from Comcast - 17 per cent higher than the company’s offer for Sky going into the auction - exceeded expectations. It was well above the £16.53 average estimate of a Bloomberg survey.
“I’m pretty excited - we’ve got a good price for it,” said Sky investor Crispin Odey, founder of Odey Asset Management. The fund manager owns 0.6 per cent of the shares, according to data compiled by Bloomberg. “I still think it may look a bit cheap in a couple of years.”
Buying Sky allows Roberts to expand the content and distribution model he has embraced since taking control of NBCUniversal seven years ago. With Sky, the Philadelphia-based company would deliver TV services to 52mn customers in the US as well as European countries such as UK, Italy and Germany, and add sought-after programming such as the rights to Premier League English soccer.