U.K. Clears Fox's Sky Bid

Getty Images
Rupert Murdoch

Walt Disney recently agreed to buy Sky News and boost its annual funding to help Fox get final U.K. approval for its bid to acquire full ownership of European pay TV giant Sky.

The U.K. government has given final clearance to 21st Century Fox's bid for full ownership of European pay TV giant Sky, in which it already owns 39 percent.

The decision came Thursday just before midday London time, ending an extended review process that started after Fox's initial offer for Sky in late 2016.

"21st Century Fox's offer for Sky has now cleared its outstanding regulatory pre-conditions," said Sky. "This follows the satisfaction by Comcast on June 15, 2018 of its outstanding regulatory pre-conditions, meaning both offers for Sky are now capable of being put formally to Sky shareholders."

Fox now must decide whether to sweeten its offer for Sky to trump a higher bid from U.S. cable giant Comcast. Investors on Thursday seemed to bet that the Murdoch family, which controls Fox, will do so, with the stock being 3 percent higher at £15.38 soon, or $20.29, after news of the government approval.

Fox early on Wednesday had increased its bid for Sky to £24.5 billion, or £14 per share, or $32.5 billion, only to be trumped again late in the day by Comcast with an offer of £26 billion, or £14.75 per share, or $34 billion.

Fox late Wednesday acknowledged that bid, but didn't immediately sweeten its own offer.

After the U.K. government's final Sky bid approval on Thursday, Fox only said it "noted" the announcement and said it has, with the written consent of the independent committee of Sky's board, "waived the element of the pre-condition concerning approval of the U.K. secretary of state, which required the expiry of the time limit within which an application to the Competition Appeal Tribunal may be made." Fox highlighted that this means that "all regulatory pre-conditions to the acquisition have now been satisfied or waived."The British government on Thursday gave its final OK to a possible Fox takeover of all of Sky under the previously agreed condition that Walt Disney acquires the Sky News network from Sky. A deal in principle had been unveiled in mid-June, under which Fox and Disney also agreed to boost Sky News' annual funding for 15 years.

Then-U.K. culture secretary Matt Hancock unveiled the so-called undertakings, or conditions, tied to the agreement and started a 15-day comment period for other parties. Following that period, the U.K. government had to make a final decision on whether to give Fox its final clearance for a potential deal to buy the remaining stake in Sky.

New U.K. culture secretary Jeremy Wright did so on Thursday, but said the government made slight tweaks to the previously agreed-upon undertakings.

"Having considered the responses to the consultation, the previous secretary of state agreed with the parties a clarificatory change to Disney’s undertakings and changes to the associated brand licensing agreement," he said. "In response to specific concerns raised by respondents, he also agreed that, where appropriate, the secretary of state will consult with the Competition and Markets Authority (CMA) in relation to these undertakings and will publish the formal written advice given by the CMA. I am content to confirm this position." 

Concluded Wright: "It is now a matter for the Sky shareholders to decide whether to accept 21st Century Fox's bid."