Comcast's surprise Sky bid opens a possible bidding war

02 March, 2018, 02:34 | Author: Regina Lloyd
  • The London headquarters of Sky the target of a bidding war between Comcast and Twenty First Century Fox

United States cable giant Comcast has put a rival offer of £22bn for Sky, in an attempt to snatch the company from the grasp of media tycoon Rupert Murdoch.

21st Century Fox bid £11.4 billion two years ago for the almost two-thirds of Sky it did not own - but a full takeover had been held up by United Kingdom government concerns. To add, the company says that it's "a significant premium to the 21CF price now recommended", and that "We would like to own the whole of Sky and we will be looking to acquire over 50% of the Sky shares".

The British competition regulator has said in a preliminary finding that a Fox takeover would give the Murdoch family too much control of Britain's media. Mr Murdoch is also chairman of News Corp, owner of The Times. "Adding Sky to the Comcast family of businesses will increase our global revenues from 9% to 25% of Company revenues". "We look at Sky as a media company", rather than a satellite TV distributor. That works out at £12.50 per share - 16% higher than Fox's offer.

He told reporters that he had taken a "keen interest" in Sky for many years. He also said that there would be expanded opportunities to distribute Sky and NBC content across both the us and the United Kingdom.

Comcast said the combination with Sky would be beneficial to Comcast shareholder and be accretive to Comcast's free cash flow per share in the first year.

Sky shares jumped by a fifth on Tuesday morning and now trade nearly 7 percent above Comcast's bid.

Analysts at Liberum said that if Fox wanted to counterbid for Sky, it would "presumably need approval from Disney" to fund the bid.

Comcast's proposed cash offer is a 13% premium of Sky's closing share price of £11.05 on Monday, and higher than Fox's bid of £10.75 a share.

21st Century Fox is now under pressure to match this valuation.




Why does Comcast want to buy Sky?

Comcast bid $60 billion a year ago to clinch a deal with Murdoch's Fox before losing out to Disney.

Disney's Iger, in Paris on a business trip, declined to comment on Tuesday.

Comcast shares fell 7.4 percent; Fox and Disney shed 3.3 and 4.5 percent, respectively.

Sky's United Kingdom headquarters, employing 1,300 staff, would be maintained. They spent at least an hour at a Sky store going through every feature and comparing it to Comcast's own X1 platform, which lets subscribers search for movies and TV shows through a Netflix-like user interface and a voice-activated remote control, Roberts said on the call.

Then he said he talked to a Sky salesperson at a Westfield mall in London, and came away impressed with Sky's offerings.

"While Comcast does own a substantial global operation in the United Kingdom, with more than 1,300 employees, the Company has only a minimal presence in the United Kingdom media market", Comcast said in its bid document.

Disney may be in the process of acquiring Fox, but Fox is also in the middle of trying to buy Sky - a makos telecom company and pay-TV service in the UK.

The UK government may also be looking for a way to defuse the political risks from the Fox bid, they added.

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