Rupert Murdoch’s 21st Century Fox threw down the gauntlet to Comcast in the race to buy Sky on Wednesday after tabling an improved £24.5 billion takeover offer.
The 1400p-per-share counterbid, which eclipses Comcast’s 1250p offer, sets a floor in the corporate tussle and could entice Comcast to table a second higher offer. Comcast have a further 46 days to come back once Fox publishes its offer document, setting up a summer-long tussle.
Sky’s independent committee, led by Standard Life Aberdeen chief Martin Gilbert, said the Fox offer was a “substantial premium” for shareholders but will have to reconsider that if Comcast trumps Fox’s bid. Murdoch’s bid is 12% above Comcast’s offer, made in April, and it also raised the prospect of going hostile after lowering the takeover threshold to a simple majority.
The US-listed media giant owns 39% of Sky, meaning it would need just 12% of shareholders to clinch the deal.
However, shares in the company nudged down 12p to 1489p, above the 1400p offer, making it harder for Fox to win shareholder support as they would have to sell at a lower price.
“This process now embodies a strong element of corporate bravado, so it is difficult to call whether Comcast will return,” said Shore Capital analyst Roddy Davidson.
“Either way we regard this as a fantastic exit value for Sky shareholders.”
Hargreaves Lansdown’s George Salmon said it “brings another twist” and warned the bidders could overpay if the deal “rumbles on much longer”. The saga, which kicked off 18 months ago when Murdoch swooped for Sky with a 1075p share offer, has kept the City on edge and embroiled everyone from hedge funds and politicians.
The Sky fight foreshadows a larger battle over the pond between Comcast chief executive Bob Roberts and Disney boss Bob Iger to buy Murdoch’s 21st Century Fox.
Roberts and Iger want to buy Fox and Sky has become a proxy for the battle, with Roberts and Iger chasing the broadcaster to give them the upper hand in the Fox fight.
Hedge funds have demanded a higher bid for Sky due to the US bidding war, saying Disney’s bid for 21st Century Fox will influence the price it pays for Sky.
The Government has also weighed in. The Culture secretary demanded Fox separate and sell Sky News if it wins the war for Sky.