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U.S. cable giant and NBCUniversal owner Comcast has outlined an unsolicited $31 billion (£22 billion) takeover bid proposal for European pay TV giant Sky, offering more than Rupert Murdoch’s 21st Century Fox.
NBCUniversal’s parent company unveiled the “possible” all-cash offer of £12.50 per share ($17.48) to Sky’s shareholders early Tuesday London time. That marks a 16 percent premium to Fox’s existing bid of £10.75 per share.
Under the British takeover code, companies need to have financing lined up for a deal and fulfill certain other requirements before they can make a formal offer.
“A combination would bring attractive financial benefits to Comcast shareholders” and is expected to be accretive to Comcast’s free cash flow per share in year one,” the company said, adding that the deal would enhance its entertainment, distribution and technology capabilities and expand Comcast’s international footprint to “more effectively compete in the rapidly changing and intensely competitive entertainment and communications landscape.”
“We think Sky is an outstanding company,” said Comcast chairman and CEO Brian Roberts. “It has 23 million customers and leading positions in the U.K., Italy, and Germany. Sky has been a consistent innovator in its use of technology to deliver a fantastic viewing experience and has a proud record of investment in news and programming. It has great people and a very strong and capable management team.”
Roberts added: “Comcast intends to use Sky as a platform for growth in Europe. We already have a strong presence in London through our NBCUniversal international operations, and we intend to maintain Sky’s U.K. headquarters. Adding Sky to the Comcast family of businesses will increase our international revenues from 9 percent to 25 percent of company revenues.”
Fox has long owned a 39 percent stake in Sky and offered to buy the remaining 61 percent in December 2016. Its bid has been dogged by a long-running regulatory review in Britain. Regulators have especially been expressing concern about the future of Sky News and the influence of the Murdoch family that controls Fox. In reaction to that, Fox has in recent weeks offered new concessions, including an extended commitment to U.K. news channel Sky News, to seal regulatory approval of the deal.
Fox didn’t immediately comment on the Comcast offer. Sky mid-day London time said: “The independent committee of Sky notes today’s announcement from Comcast regarding a possible all cash offer for Sky at £12.50 per share. The independent directors of Sky are mindful of their fiduciary duties and their obligations under the U.K. Takeover Code. Since no firm offer has been made at this point, shareholders are advised to take no action. A further announcement will be made as and when appropriate.”
Observers said Fox was unlikely to raise its bid for Sky, given that it has agreed to sell a large number of assets, including its 39 percent stake in Sky, to Disney. “Unless Fox comes back with a raised counterbid, then the rational solution [for shareholders] is to accept the Comcast bid,” Whittaker said. “Moreover, for many shareholders, the Comcast bid may be more attractive even if Fox does come back with a raised bid, as it would come with much lower regulatory risk (Comcast does not have the same PR issue as Fox does in the U.K.) and the comments about investing in the U.K. content space, upholding news impartiality and a commitment to the U.K. in general are likely to help the bid gain favor with the U.K. government, who may be looking for an optimal way to defuse the political risks from the Fox bid.”
Just before Disney unveiled its $52.4 billion takeover deal for various entertainment businesses of Fox in December, Comcast had also been looking to make an offer. But it bowed out, saying it never got a full chance in the process.
“When a set of assets like 21st Century Fox’s becomes available, it’s our responsibility to evaluate if there’s a strategic fit that could benefit our company and our shareholders,” Comcast said at the time. “That’s what we tried to do, and we are no longer engaged in the review of those assets. We never got the level of engagement needed to make a definitive offer. We have a terrific company with a strong portfolio of businesses and will continue to focus on driving growth, innovating, creating great content and providing excellent experiences for our customers.”
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