Comcast outbids Fox in auction for Sky

Comcast’s offer of £17.28 per share was £1.61 ahead of Fox’s offer of £15.67.

The US giant’s victory follows a dramatic shoot-out with US entertainment giant 21st Century Fox in a rare three-round auction overseen by the Takeover Panel.

The result ends 21 months of uncertainty for Sky over its ownership after the company’s independent committee unanimously recommended the offer to shareholders.

In a statement Sky plc said: “As the price of the final Comcast Offer is materially superior, it is in the best interests of all Sky shareholders to accept the Comcast offer.

“Accordingly, the Independent Committee unanimously recommends that Sky shareholders accept the Comcast offer, and in order to ensure the successful closing of the Comcast offer, urges shareholders to accept immediately.”

Both companies want Sky to help them compete more effectively with the new wave of online entertainment providers, including streaming services provided by the likes of Netflix and Amazon Video, who sell their content directly to viewers.

Comcast in particular wants Sky to give it a presence in Europe and reduce its dependence on the US and has also made clear its admiration for Sky’s technological know-how.

Disney, meanwhile, has been looking for a way to make its content available directly to viewers without having to go via a third party like a cable company.

Sky agreed to be taken over by Fox, its biggest shareholder, in December 2016. Since then, Fox has agreed to sell most of its entertainment assets to Disney, including its Hollywood film studio and its 39.1% stake in Sky.

However, the bid was held up by a lengthy series of investigations by the Competition & Markets Authority and by Ofcom, the broadcasting and telecoms regulator.

That opened the door for Comcast to make a counter-bid for Sky. In July, it tabled a £14.75-a-share offer for Sky, valuing the company at £26bn.

That was the highest offer going into today’s auction and compared with Friday night’s closing price of £15.85.

Under the contest, Fox – as the lower bidder – was entitled to raise its offer first.

In the second round, only Comcast was allowed to raise its offer.

This meant the two sides went into a final “sudden death” round of bidding.

Such auctions are exceptionally rare. There have been only four since the rules were changed in 2002 and the most recent of these was in April 2008 when Enodis, a maker of kitchen equipment for McDonald’s and Burger King, was acquired by the US company Manitowoc for £948m.

Brian Roberts, chairman and chief executive officer of Comcast, said it was a “great day”.

He added: “Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team.

“This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally.

“We couldn’t be more excited by the opportunities in front of us.

“We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018.”

Jeremy Darroch, group chief executive for Sky, said: “This is the beginning of the next exciting chapter for Sky.

“Brian and his team have built a great business and we are looking forward to bringing our two companies together for the benefit of our customers and colleagues.

“As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct to consumer media company.

“Today’s outcome is down to the hard work of tens of thousands of people who have built and developed this business together over the last 30 years. Sky has never stood still, and with Comcast our momentum will only increase.”

21st Century Fox said in a statement that it was “considering its options regarding its own 39% shareholding in Sky and will make a further announcement in due course”.

It added: “Sky is a remarkable story and we are proud to have played such a significant role in building the incredible value reflected today in Comcast’s offer.”

Other companies whose fates have been decided by an auction overseen by the Panel include Corus, the owner of British Steel and Canary Wharf, the commercial property company.

However, in terms of the amount of money being paid, this auction is by far the biggest yet.

Sky, which was founded in 1989, is Europe’s biggest pay television broadcaster.

It has 23 million household customers in the UK, Ireland, Germany, Austria and Italy, while it has recently launched “over the top” services in Spain and Switzerland.

It floated on the stock market in 1994 and, since flotation, has been a remarkably stable business, having had just five chief executives in the intervening 24 years – the late Sam Chisholm, Mark Booth, Tony Ball, James Murdoch – who is the current chairman of Sky and current chief executive of Fox – and Mr Darroch, the current incumbent.