The Stakes Just Got Higher in the 21st Century Fox v. Comcast Battle for Sky
Fox’s latest offer of 14 pounds per share values Sky at 24.5 billion pounds ($32 billion), a 12% premium to Comcast’s rival 22 billion pound offer, the New York-based media company said in a statement Wednesday. Sky shares fell as much as 2% in early trading, as some investors had expected a higher counter from Fox (FOX).
“They’re way behind the curve still,” said Crispin Odey, founder of Odey Asset Management LLP, which owns shares of Sky. “I think it will go at about 18 pounds.”
Now it’s up to Comcast (CMCSA) to decide how much Sky is worth. The European pay-TV company has become a pawn in a wider contest between Comcast and Walt Disney (DIS) for the bulk of Murdoch’s media empire, as each seeks scale to take on streaming competitors like Netflix. Murdoch has agreed to sell Fox’s entertainment assets including its stake in Sky to Disney, though Comcast is weighing another counteroffer for the Fox portfolio.
Sky shares traded at 14.85 pounds as of 8:14 a.m. 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 to shareholders of the London-based company, under U.K. takeover rules.
The expectation from some analysts had been that Fox would wait for final U.K. 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.
The U.K. 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 Minister Matt Hancock, who was replaced Monday night with Jeremy Wright in a cabinet shakeup, had said he was willing to let the takeover go ahead, provided Fox sold Sky’s 24-hour news channel to Disney.
Fox first went after the 61% of Sky it doesn’t already own in December 2016, offering 10.75 pounds per 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 pounds per 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.