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Comcast tops Fox offer in latest reach for Sky

The Associated Press

The headquarters of television broadcaster Italian Sky in Milan in July 2014

Reuters LONDON (Reuters) — Comcast Corp. on Wednesday raised its all-cash offer for Britain’s Sky to $34 billion, topping a raised bid of $32.5 billion for the pay-TV group from Rupert Murdoch’s Twenty-First Century Fox.

Fox, which has been trying to buy the pan-European group since December 2016, offered to pay £14 per share, a 12 percent premium to Comcast’s earlier offer.

Comcast on Wednesday increased its cash offer to £14.75 per share. Sky shares closed at £15.15.

Comcast said its cash offer has been recommended by Sky’s independent committee of directors.

The U.S. cable group gatecrashed Murdoch’s attempt to buy the 61 percent of Sky his group did not already own in February, when Fox was still firmly stuck in the regulatory process.

The fight for Britain’s leading pay-TV group is part of a bigger battle being waged in the entertainment industry as the world’s media giants splash out tens of billions of dollars on deals to be able to compete with Netflix and Amazon.com.

Comcast and Walt Disney are locked in a separate $70 billion-plus battle to buy most of Fox’s assets, which would include Sky.

Disney secured conditional U.S. approval to buy the assets last month, giving it an edge over Comcast’s bid.

Hong Kong-based hedge fund Case Equity Partners, a Sky investor, said the fact Disney was in a slightly more favorable position for Fox’s U.S. media assets meant Comcast would fight even harder to get Sky.

“Today’s Fox bid is unlikely to be the end game as we see a final Sky deal outcome at well over 15 pounds per share,” said managing partner Michael Wegener.

Present in 23 million homes across Europe, Sky is a prized asset, with a slate of top sport and original drama content.

“This transformative transaction will position Sky so that it can continue to compete within an environment that now includes some of the largest companies in the world,” Fox said.

Its offer represents an 82 percent premium to Sky’s shares in 2016 before the takeover drama started, and a multiple of 21 times 2017 earnings per share.

However, British regulators have indicated that if Disney succeeds in buying Fox, including the 39 percent stake in Sky, it would be required to offer the same price for the remainder of Sky. According to some shareholders, that has set an implied higher floor for Sky’s shares.

Hedge funds including Elliott have bought into Sky in recent months and other vocal shareholders such as Crispin Odey have demanded that the independent directors secure a better deal.

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