The drawn-out battle for control of Sky Plc between 21st Century Fox Inc. and Comcast Corp. will reach a climax this Saturday in an one-day auction that will settle who’s willing to pay the most for Europe’s biggest satellite carrier.
Britain’s Takeover Panel laid out the guidelines for an auction of as many as three rounds on Saturday. Sky investors will have about two weeks to decide to tender their shares to whichever offer they consider superior. Sky shares were little changed at 15.80 pounds at 2 p.m., giving the company a market value of 27 billion pounds ($35 billion).
Sky is the final prize in a competition between Comcast and Walt Disney Co. for the bulk of Rupert Murdoch’s media empire. Disney warded off Comcast’s attempt to buy the entertainment assets by securing a deal for $71 billion, including Fox’s 39 percent stake in Sky.
“This will most likely mark the end of a process that we have managed for almost two years,” Sky Chief Executive Officer Jeremy Darroch said in an email to employees obtained by Bloomberg. “Whatever the outcome, the prospects ahead of us are exciting.”
An auction procedure, used only rarely to settle major takeover battles in the U.K., was established after discussions with the parties, the panel said. Bloomberg earlier reported the timing of the one-day auction to settle the biggest purchase since the panel was established in 1968 to supervise and regulate takeovers of British companies. The panel said it’s possible that both final bids are at the same price.
Faced with two cash bids, investors typically choose the higher offer to maximize returns, however barring a knockout offer from either suitor, Fox looks to retain the upper hand over Comcast, because of the advantage gained from its existing stake.
Fox last month gave itself the option of lowering the bar for approval for its bid to as little as 50 percent of Sky, meaning it needs just 11 percent more. Comcast, on the other hand, needs to secure more than eight-tenths of the shares not held by Fox to get past 50 percent.
Should Comcast persuade a majority of Sky holders to tender, however, it could still end up with its battleground rival Fox — and eventually Disney — as the other major minority owner of the U.K. company.
The panel told the bidders not to publicly announce the value of their bids until the body has made its own announcement of the final offers, “as soon as practicable” after the auction closes on Saturday.
Disney would inherit Sky if Fox’s bid prevails, giving it 23 million potential European customers for its channels such as ESPN sports and future entertainment streaming services. Should Comcast CEO Brian Roberts win the fight for Sky, he would gain a direct-to-consumer business with similarities to his own in the U.S., offering scale and scope to share technological know-how with the U.S. cable giant.
Britain’s top pay-TV company has been in play since December 2016, when Fox offered to buy out Sky’s other shareholders. Comcast joined the battle in February, and currently has the highest offer on the table at 14.75 pounds per share. Fox’s latest offer stands at 14 pounds per share.