21st Century Fox's updated bid for Sky is equivalent to £14 per share.GETTY IMAGES
The cold war between 21st Century Fox and Comcast over ownership of Sky "finally turned hot" with a new £24.5B ($32.4M) offer from the Murdoch camp, according to Christopher Williams of the London TELEGRAPH. The bid is equivalent to £14 ($18.50) per share, nearly a third more than the £10.75 ($14.20) price Fox agreed to pay 18 months ago and 12% higher than Comcast’s £12.50 ($16.50) offer. Sky’s independent directors, led by Deputy Chair Martin Gilbert and including CEO Jeremy Darroch, "immediately agreed to the offer and relaxed the conditions the Murdoch bid will have to meet to succeed." Fox previously required approval from a majority of the shareholders owning the 61% of Sky it does not control. Under the new terms of its agreement with Sky, it "could need only a simple majority of this group" (TELEGRAPH, 7/11). In London, Mark Sweney reported Murdoch "felt emboldened to forge ahead with a new offer" as he is finally set to be given clearance by the government to take over Sky. U.K. Culture Secretary Jeremy Wright will clear the bid in an announcement scheduled to be made by Thursday. Earlier this week, it was reported Murdoch would "gain clearance" to finally take over Sky, after 18 months of battling "regulatory red tape" and political opposition to the deal, and raise his bid. Wright, who was hired this week, will deliver the result on a final consultation on plans to make Murdoch sell Sky News to reduce his control of U.K. news media (GUARDIAN, 7/11). In London, Massoudi, Garrahan & Samson reported the new offer is pitched below the trading range for Sky shares in recent days, which closed on Tuesday at £15.01 ($19.83), giving it a market value of £25.6B ($33.8B). Sky has net debt of £7.4B ($9.8B), according to FactSet data. The shares "slipped back" to £14.94 ($19.74) by the close of London trading on Wednesday. Analysts questioned Fox’s latest offer. Independent City analyst Alex DeGroote said, "It seems inconceivable a deal can go through at this £14 level. This is not a knockout blow at all [and] we are puzzled it's recommended." A number of hedge funds, including Seth Klarman’s Baupost Group, Paul Singer’s Elliott Management, Davidson Kempner and Odey Asset Management, "piled into Sky shares in the expectation of a continuing bidding war" (FINANCIAL TIMES, 7/11). In London, Simon Duke wrote this "long-running saga is proving very profitable for shareholders." The latest bid is at an 82.1% premium to the £7.69 at which Sky shares were trading before 21st Century Fox’s initial approach in Dec. '16. It could also "generate enormous payouts for several hundred of Sky’s most senior staff" (LONDON TIMES, 7/11).
