Visitors walk past a gate at Walt Disney Co.’s Disneyland Resort in Shanghai (Photographer: Qilai Shen/Bloomberg)

Disney Forced Into Takeover Offer for Sky If Fox's Bid Fails

(Bloomberg) -- Walt Disney Co. will be forced to bid for Sky Plc if U.K. regulators block an existing offer by 21st Century Fox Inc. for the British pay-television company.

Disney would have to offer at least 10.75 pounds per Sky share upon completing its $52.4 billion acquisition of most of Fox’s media and entertainment assets, the U.K. Takeover Panel said Thursday in a statement. Those assets include Fox’s 39 percent stake in Sky. Disney wouldn’t be obligated to bid should Fox or Comcast Corp. acquire the London-based company.

The decision to tie Disney to the same price offered by Fox in 2016 may disappoint some Sky shareholders expecting a higher mandatory bid. However, it also means they have a likely bidder for the business and a price floor should the Fox takeover be blocked by regulators and if Comcast doesn’t formalize its proposed 12.50 pound-a-share offer for Sky.

“It’s very good news,” said Crispin Odey, founder of hedge fund manager Odey Asset Management, which owns a 0.8 percent stake in Sky according to data compiled by Bloomberg. “Disney have underpinned the 10.75 bid.”

The ruling settles months of speculation regarding whether Disney would have to make a direct bid for Sky after Disney’s December offer for the bulk of Fox’s media and entertainment assets. At the time, Disney said it didn’t think it should be forced into bidding for Sky.

The panel’s decision was based on a determination that securing control of Sky “might reasonably be considered to be a significant purpose of Disney’s acquiring control of Fox,” according to the statement.

A bid at 10.75 pounds a share values all of Sky at 18.5 billion pounds ($26.3 billion).

Fox is awaiting a review from the U.K.’s competition watchdog due May 1 concerning its own Sky bid. Culture Secretary Matt Hancock will consider the regulator’s ruling and make a final decision on the Fox-Sky deal by mid-June.

Sky shares rose 0.1 percent to 13.11 pounds at 1:15 p.m. in London. In a statement, Sky advised shareholders to take no action on the Takeover Panel decision. Disney declined to comment.

‘Big Gorillas’

Hedge fund shareholders of Sky including Polygon Global Partners LLP had called for a mandatory bid for Sky by Disney at a higher price than the Fox offer. While the Takeover Panel only requires a 10.75-pound-a-share bid from Disney, the company will have to offer much more to take on Comcast, Odey said.

“All of us really believe it’s going to end up in a bidding war,” Odey said, speculating that offers may climb as high as 16 pounds a share. “We’ve got two big gorillas, neither of whom likes to lose. And they’ve got quite a good prize.”

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