Published: Mon, July 16, 2018
Finance | By Claude Patterson

Rupert Murdoch's Fox cleared for Sky takeover bid

Rupert Murdoch's Fox cleared for Sky takeover bid

Sky's shares were trading 3% higher as investors were betting on a higher bid from Fox to see off Comcast's competition.

The British broadcaster has been the subject of a fierce bidding war between Fox and U.S. cable company Comcast.

The ball is now in Fox's - or in essence Disney's - court as to whether to top the Comcast offer for Sky. Netflix and Amazon Prime however, are really starting to eat into Sky's market by offering streaming content at much cheaper prices.

If Disney's purchase of Fox assets, including Fox's current 39% stake in Sky, closes before any separate deal for the pay-TV firm, Disney would be obliged under United Kingdom rules to make an offer for the remainder of Sky within 28 days. Should Fox be the eventual victor, it has been stated that the news sector of the company, Sky News, must be sold to a rival.

Netflix isn't going anywhere regardless of what Disney does, but if Disney is successful in acquiring the assets from 21st Century Fox, it will definitely be in a ideal spot to challenge them as a top platform. "At £14.75 purchase price for Sky and no Fox deal, our model suggests EPS accretion in years 1-2 for Comcast with leverage in a low-3x range", he said. During their review of the deal that acceptance came down to eight factors, one of which was the U.S. Department of Justice's "apparent sensitivity to the potential anti-competitive effects of vertical integration" according to Fox's filing. Last month, we explained how the Sky auction has become a strategic part in the larger contest between Comcast and Disney. Iger sees an opportunity to expand Disney's direct to consumer offerings and worldwide presence and make Disney a global entertainment company with the United Kingdom pay-TV operator's 23 million customers. The Comcast bid has already been cleared. Fox has countered this yesterday, only for Comcast to further increase it's offer today. He's appealing a decision to approve AT&T Inc.'s acquisition of Time Warner Inc. - a move that could bear relevance to Comcast.

On Thursday, Comcast shares were up 1.8 % and Disney was up 0.7%. Fox recently accepted Disney's $71 billion offer. Currently, the bid by Comcast stands at £26bn.

Given that the 39% stake - deemed a controlling shareholding - would be transferred to a new owner, rules stipulate that the new owner must offer the minority investors an opportunity to exit by buying out their shares.

Technology companies are soaring Thursday as investors remain optimistic about the sector even though much of the market has been shaken by fears about the trade war with China.

Hong Kong-based hedge fund Case Equity Partners, a Sky investor, said the fact Disney was in a slightly more favourable position for Fox's USA media assets meant Comcast would fight even harder to get Sky.

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