Sky bid tussle to be settled by auction

Irving Hamilton
September 22, 2018

The Takeover Panel said the two American companies bidding for control of Sky - film and TV group 21st Century Fox and cable giant Comcast - would be invited to take part in a three-round auction on Saturday if a competitive situation between the pair continued to exist by 5pm on Friday.

A United Kingdom regulator said Thursday that, barring a settlement, a three-round bid process will take place on Saturday - after which a victor will be named.

Fox was yet to raise its £14 per share bid for the 61% of Sky that it does not already own.

A bidding war emerged last December, when Comcast made an offer for Fox's entertainment assets, which Disney is in the process of buying for about $71 billion.

Comcast eventually dropped out of that contest to focus on its acquisition of Sky. The regulator ordered the current auction process to end at noon in New York City on Friday.

Comcast now leads Fox with a 14.75 pound a share offer for control of the pay-TV group that values it at 25.9 billion pounds ($34.2 billion) and has been recommended to investors by Sky's independent directors.

Should Comcast persuade a majority of Sky holders to tender, however, it could still end up with its battleground rival Fox - and eventually Disney - as the other major minority owner of the United Kingdom company. All bids must be in cash. Sky investors will have about two weeks to decide to tender their shares to whichever offer they consider superior. Both have upped their bids over the past months as their face-off played out.

It will also mean that the core value of the combined company won't be eroded in a bidding war, inflicting a "winner's curse" on the buyer.

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Sky is "a jewel in a crown", says media analyst Alice Enders.

The Panel said the auction would be completed on Saturday evening and that it would make an announcement as "soon as practicable" after that.

Sky is a unique asset.

Sky has almost 23 million pay-TV subscribers in the United Kingdom and Ireland, Italy, Austria and Germany.

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.

Both Disney and Comcast have made undertakings to the United Kingdom government that guarantee the funding and editorial independence of Sky News should they take control of Sky. Rupert Murdoch's last bid foundered amid a 2011 phone-hacking scandal, in which journalists working for Murdoch newspapers were accused of gaining illegal access to the voicemail messages of crime victims, celebrities and members of the royal family.

The process began when Mr Murdoch's original News Corp put forward a bid for full control of what was then BSkyB. "And the season finale will now take place this weekend".

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