Fox Plans Higher Bid for Sky Ahead of U.K. Approval

(Bloomberg) -- 21st Century Fox Inc. is preparing a higher offer for Sky Plc to counter Comcast Corp., according to people familiar with the matter, marking the latest twist in a global M&A contest between some of the world’s largest media companies.

The move is likely to come around the time of the formal approval by Britain for Fox’s bid, which is expected to come as soon as this week, said the people, who asked not to be identified as the deliberations are private.

Fox needs to raise its offer of 10.75 pounds per share for the 61 percent of the British pay-TV company it doesn’t already own, in order to challenge Comcast’s 12.50 pounds per share bid. Comcast, which already won U.K. approval for its Sky approach, has a deadline of Friday to put the 22 billion pound ($29 billion) proposal to Sky shareholders under U.K. takeover rules.

The tussle over Sky is part of a wider bidding contest between Comcast and Walt Disney Co. for the bulk of Rupert Murdoch’s media empire, as each tries to scale up to take on streaming competitors Netflix Inc. and Inc. Murdoch has agreed to sell Fox’s entertainment assets including its stake in Sky to Disney, though Comcast is weighing another counteroffer for the Fox portfolio.

Fox first bid for Sky in December 2016, but the deal has been held up over concerns that the tie-up would give Murdoch too much influence over Britain’s media. U.K. Culture Secretary Matt Hancock has said he’s willing to let the takeover go ahead, provided Fox sells Sky’s 24-hour news channel to Disney. With a consultation period on the remedy having closed last week, the clock is ticking on Hancock’s final ruling.

Sky’s shares have traded consistently above Comcast’s offer for Britain’s largest commercial broadcaster, initially made in February, as investors anticipate that Fox or Disney would come back with more.

The price at which Fox bids for Sky may be influenced by another ruling that could come soon from U.K. takeover authorities.

The Takeover Panel is weighing the price at which Disney would be forced to bid for Sky if it were to acquire Fox’s 39 percent stake in the broadcaster. That price is likely to act as a floor for the valuation of Sky.

The regulators ruled in April that Disney would have to make a mandatory bid for Sky at 10.75 pounds per share, given that was the value Disney attached to the Sky stake when it first bid for the Fox assets. Disney has since increased its bid for the Fox portfolio by 35 percent, leading hedge-fund investors in Sky to push the panel for a higher mandatory price.

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