At 1pm today (12 Sep) the deadline for acceptances on US media giant Comcast’s £14.75 offer for pay TV firm Sky (SKY) is set to expire.
The deal is backed by the board but with the shares trading at £15.44, investors are apparently still expecting a rival approach.
We are finally entering end game for a saga which began the best part of two years ago with a £10.75 per share bid from Rupert Murdoch’s 21st Century Fox which already owned 39% of the business.
The deadline on Comcast’s bid has already been extended once, in late August, when it revealed it had only received acceptances representing 0.21% of Sky shares. It is looking for 50% acceptance to progress the deal.
The low level of acceptances implies that investors are holding out for a higher bid from Fox. It has set a deadline of 17 September for acceptances on its current £14 per share bid but has its own deadline of 22 September to make a counter offer to Comcast. It has set a condition of receiving 75% shareholder support as a minimum.
UNTANGLING THE BID SITUATION
Just to make things more complicated, Fox is set to become part of Disney, after the latter finalised a takeover agreement for its TV and film divisions at the end of July.
Britain’s Takeover Panel has ruled Disney must make a mandatory bid at £14 per Sky share if its deal to buy the Fox assets completes before either Fox or Comcast have completed their takeover of Sky.
Hedge fund manager Crispin Odey, a major Sky shareholder, has argued bidding could reach £18 per share or even higher.
The interest in Sky reflects a wish on the part of Comcast to grow its international business - with the takeover a shortcut to directly accessing a broad base of consumers in the UK, Germany and Italy.
For Murdoch the motivation may be more personal given he founded the company in 1990 and has been trying to gain full control for several years.
Whoever is successful, they will be getting a business with a relatively simple model.
Sky charges viewers a monthly fee for access to its television, broadband, mobile and landline services.
It has two obvious levers for growth: increase the number of subscribers and/or increase the average revenue per user by selling them more services or content. The group’s ownership of premium sports rights helps underpin its strong position in the market.
