Comcast Offer Sets Up Sky Bidding War

Sky has now removed its previous recommendation that shareholders accept 21st Century Fox’s offer of £10.75 per share

Allan C. Nichols 25 April, 2018 | 3:05PM
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Sky Bidding War

Comcast has today formalised its intention to buy UK satellite broadcaster Sky (SKY), offering £12.50 a share or £22 billion. With this formal offer, the independent board of Sky removed its previous recommendation that shareholders accept 21st Century Fox’s offer of £10.75 per share. They also removed Fox’s liability of £200 million break fee if the deal wasn’t completed and stated an offer would require 50% of the vote of independent shareholders.

This requirement removes Fox’s biggest advantage of already locking up 39% of the vote. We believe this increases the likelihood of a bidding war for Sky. However, Morningstar equity analysts also recognise that Fox and Disney – which has agreed to acquire Fox – have already gone through the majority of the regulatory review process, while Comcast has not. Thus, a deal could still be reached more quickly through Fox or Disney than through Comcast, meaning that the time value of money favours Fox and Disney.

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Allan C. Nichols  Allan C. Nichols