Disney Must Offer to Buy All of Sky if Fox Deal for Pay TV Giant Doesn't Close

SKY headquarters in Isleworth on May 9, 2017 - Getty-H 2018
Leon Neal/Getty Images

It must make an offer of £10.75 per share in cash if it completes its Fox takeover, unless by then Fox has acquired 100 percent of Sky or any third party has acquired more than 50 percent of Sky, a U.K. regulator says.

The U.K. Takeover Panel on Thursday ruled that Walt Disney must make a mandatory offer to buy full 100 percent control of Sky if and when it completes its planned acquisition of large parts of 21st Century Fox, including Fox's stake in Sky. 

Fox currently owns 39 percent, but has offered to take over the remaining 61 percent to take full control. The deal for that is being reviewed by U.K. regulators, while Comcast has also said it was ready to make a competing offer for Sky. Disney must make a full offer for Sky when it closes its Fox takeover and if the Fox deal for the rest of Sky doesn't close before then and if no other company, including Comcast, buys a controlling stake in Sky first.

The Takeover Panel in its opinion said it "considers that securing control of Sky might reasonably be considered to be a significant purpose of Disney’s acquiring control of Fox," adding the conglomerate would have to offer the same price that Fox has offered to buy the rest of Sky. "Each of Disney, Fox and Sky has accepted these rulings," it added.

"Sky notes the ruling announced by the panel executive, earlier today, that The Walt Disney Company will be required to make a mandatory offer for Sky at a fixed price of £10.75 in cash per Sky share within 28 days of completion of Disney's proposed acquisition of 21st Century Fox, unless by then 21st Century Fox has acquired 100 percent of the Sky shares, or any third party has acquired more than 50 percent of the Sky shares," Sky said.

It added: "At this stage, Sky shareholders are advised to take no further action. Further advice to Sky shareholders will be announced in due course."

Fox highlighted: "Under the ruling, any mandatory offer by Disney would only be required after Disney’s acquisition of 21st Century Fox is completed, which 21st Century Fox currently expects to occur after completion of 21st Century Fox’s offer for Sky."

It added: "21st Century Fox remains committed to its recommended cash offer for Sky announced on 15th December 2016, which is supported by revised remedies recently offered to the Competition and Markets Authority with whom 21st Century Fox has been co-operating in order to bring the U.K. regulatory process to a swift and satisfactory conclusion." A final CMA report is expected by early next month, with a decision by the U.K. government due by mid-June.