Fox-Sky bidding war: What's next?

Josh Mines
OFCOM Considers The Multi-billion Pound Takeover Of SKY By 21st Century Fox
The government gave approval for Fox's bid for Sky today (Source: Getty)

Sky investors will be rubbing their hands together with glee as the bidding war between Rupert Murdoch's Fox and Comcast heated up this week.

The media giant's share price closed more than three per cent up to reach an 18-year high today, as late on Wednesday Comcast submitted a $34bn (£26bn) offer, hours after Fox's £24.5bn bid.

The UK's Department for Culture, Media and Sport also helped matters as newly appointed head Jeremy Wright today gave Fox's offer the green light, finalising a regulatory process which started when Fox initially made the offer in December 2016.

Read more: Disney gains US approval for Fox deal

Comcast's bid was cleared by the government back in June, leaving no regulatory hurdles in the way of either company.

Analysts reckon shares could take off as a bidding war for Sky gets into full flow. Jerry Dellis, an equity analyst at Jefferies said Fox's offer was "no knock out", adding that Comcast's bid was the "the opening shot in an endgame which will gather pace following the granted approval of Fox/Sky by the secretary of state".

The offers leave the ball very much in Sky's court. Under UK takeover rules, Sky has 60 days to consider both offers and decide which one to put to investors.

After getting approval from the DCMS, Fox has 28 days to notify its shareholders to vote on the potential deal with Sky.

But Comcast's superior offer puts it in the driving seat. In a statement, it said Sky's Independent Committee of Directors had recommended its superior offer - and that a deal is expected to complete before the end of October 2018.

Read more: Sky agrees to improved £24.5bn bid from Rupert Murdoch's 21st Century Fox

However, Fox could put a spanner in the works if it does, as analysts predict, decide to put in a counter-offer for Sky.

The battle for Sky is raging in the shadow of an even bigger takeover struggle between Disney and Comcast for Fox's entertainment assets - which includes Murdoch's 31 per cent Sky stake.

Fox is currently evaluating Disney's latest $71.3bn cash and share offer, which is far higher than Comcast's $65bn cash bid, and investors are set to vote on the deal on 27 July.

The result of the auction has a knock-on effect for Sky - if Comcast fails in its bid to control Fox's assets (which is likely given Disney's enormous cash reserves) the need to beat Fox in the Sky takeover fight becomes even greater. ​

Read more: Sky's the limit: Comcast raises bid to $34bn

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