Comcast formalises $30.7bn bid for Sky

Bloomberg

Comcast Corp. formalised its 22 billion pound ($30.7 billion) bid for Sky Plc, throwing down the gauntlet to Rupert Murdoch’s 21st Century Fox Inc. and Walt Disney Co as they vie for Britain’s largest pay-TV broadcaster.
Sky’s independent board members welcomed the offer and said they’re withdrawing their recommendation that shareholders accept the Fox proposal. Comcast is offering 12.50 pounds a share in an all-cash deal, the Philadelphia-based company said in a statement on Wednesday, confirming a proposed offer it made on Feb 27. The offer is 16% above Fox’s 10.75 pound-per-share bid for Sky.
Media billionaire Murdoch must now decide whether to increase Fox’s bid to stave off Comcast’s challenge, raising the prospect of a bidding war. Fox, which already has a 39 percent stake in Sky, plans to sell the broadcaster to Disney as part of their $52.4 billion merger announced in December.
In a separate statement, Fox said it remains committed to buying Sky and is “considering its options,” with a further announcement in due course. Murdoch’s company also faces the uncertainty of a UK regulatory review that has delayed the Sky purchase, which was first announced in December 2016.
Sky’s shares rose 3.6 percent to 13.55 pounds at 11:56 a.m. in London. Since Comcast announced its proposed bid, Sky’s stock had been trading at more than 13 pounds, above the Comcast price, as investors expected a protracted battle for the UK broadcaster.
“This might elicit the bidding war,” said Alex DeGroote, a media analyst at Cenkos Securities. “We now have a formal proposition, instead of just a suggestion. Sky at these levels is a free bet on the upside.”
Comcast said it expects the Sky deal to generate annual run-rate synergies of around $500 million, through a combination of revenue benefits and recurring cost savings.
“We have long believed Sky is an outstanding company and a great fit with Comcast,” CEO Brian Roberts said in the statement. “We very much hope that the independent committee of Sky directors will recommend our superior cash offer.”
Comcast said acquiring Sky would boost its ability to invest in programming, innovation and would significantly expand its international footprint. About a quarter of Comcast’s sales would come from overseas after a successful acquisition of Sky, compared to 9 percent currently, the company said.
Fox is still awaiting regulatory clearance in the UK for its Sky bid, with a final decision from Culture Secretary Matt Hancock expected by mid-June.