The battle for Sky intensified on Thursday after a sweetened £26 billion bid by Comcast put pressure on rival suitor 21st Century Fox to table a higher offer.
The US owner of NBCUniversal topped a 1400p offer from Rupert Murdoch’s Fox by increasing its bid to 1475p, 5.4% higher than the rival figure.
Sky’s independent committee, led by Martin Gilbert, has recommended the Comcast offer.
“We have long admired Sky which we believe is an outstanding company and a great fit with Comcast,” said chief executive Brian Roberts.
The door is now open for Fox to come back with a third bid, up from its original 1075p in 2016 and 1400p yesterday. It will have to top 1475p to clinch victory. Comcast had bid 1250p in April.
Shares rose 2.2% today gaining 32.5p to 1526.5p. The market price is still higher than the bid, suggesting investors think the offers could go higher.
“Now we’re moving into a proper auction,” said top Sky shareholder Crispin Odey. “These two bidders are just getting their paddles out and testing they can be seen by the auctioneer. It’s heady stuff for most investors. We’re enjoying ourselves.”
Odey said Sky’s additional cash flows meant shares could be worth between 1800p and 2600p each. Sky shares have doubled since December 2016, when it was put in play after Fox bid for the 61% of shares it did not already own.
Culture Secretary Jeremy Wright is expected to approve a takeover of the broadcaster today after his department secured concessions that Fox would ring-fence and sell Sky News.
Comcast wants to buy Sky to beef up its international operations. Doing so would accelerate its non-US revenues by a substantial margin.
However Sky is also a cog in a bigger battle between Comcast and US giant Disney for control of Murdoch’s vast media empire.
Murdoch is selling 21st Century Fox, which is bidding for Sky, to either Comcast or Disney.
That means the sale price of Sky, which is 39% owned by Fox, depends on how much Fox is sold for.
“The speed with which Comcast has responded to Fox’s bid speaks volumes about the determination of Comcast, led by Brian Roberts, to win the day,” said Share Centre analyst Ian Forrest.
Roberts, 59, is little known in Britain. The squash champion is the son of Comcast founder Ralph Roberts and a major shareholder in the company.