Sky worth €27.7bn in bid

By Paul Sandle and Kate Holton

Rupert Murdoch’s 21st Century Fox has raised its offer for Sky in an agreed deal valuing the pay-TV group at $32.5bn (€27.7bn), seeing off rival bidder Comcast for now.

Fox, which has been trying to buy the pan-European group since December 2016, offered to pay £14 per share, a 12% premium to Comcast’s offer, but below the £15 Sky shares were trading at yesterday.

Analysts said the bid threw down the gauntlet for Comcast, the world’s biggest entertainment company, to return with a higher offer.

The US cable group gatecrashed Murdoch’s attempt to buy the 61% of Sky his group did not already own in February, when Fox was still firmly stuck in the regulatory process. One top-40 Sky shareholder said they expected Comcast to come back with a counter bid for Sky.

“The end price really depends on the appetite of those companies and how much they are willing to take their leverage up and at what stage their shareholders say enough is enough,” the shareholder, who did not wish to be identified, said.

The fight for the pay-TV group is part of a bigger battle being waged in the entertainment industry as the world’s media giants offer tens of billions in deals to be able to compete with Netflix and Amazon.

Comcast and Walt Disney are locked in a separate $70bn-plus battle to buy most of Fox’s assets, which would include Sky.

Disney secured conditional US approval to buy the assets last month, giving it an edge over Comcast’s bid.

Hong Kong-based hedge fund Case Equity Partners, a Sky investor, said the fact Disney was in a slightly more favourable position for Fox’s US media assets meant Comcast would fight even harder to get Sky.

“Today’s Fox bid is unlikely to be the end game as we see a final Sky deal outcome at well over £15 per share,” said managing partner Michael Wegener.

Comcast declined to comment on Fox’s new offer. Present in 23 million homes across Europe, Sky is a prized asset, with a direct relationship with its customers and a slate of top sport and original drama content.

“This transformative transaction will position Sky so that it can continue to compete within an environment that now includes some of the largest companies in the world,” Fox said.

Its offer represents an 82% premium to Sky’s shares in 2016 before the takeover drama started, and a multiple of 21 times 2017 earnings per share.

- Reuters

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