The U.K. government intends to allow Comcast Corp.s 22 billion-pound ($30 billion) bid for Sky Plc to move ahead, a boost for the U.S. cable giant as it vies with 21st Century Fox Inc. for Britains largest pay-TV company.
Comcasts offer for Sky doesnt trigger public-interest concerns that would meet the threshold for intervention, Culture Secretary Matt Hancock said in a statement.
The decision could put Comcast ahead of Rupert Murdochs Fox in the regulatory race for Sky, as Fox is still expecting the final call on its 11.7-billion pound bid for the 61 percent of the broadcaster it doesnt own in the coming weeks. Hancock has invited interested parties to give feedback on his intention by Thursday, after which he will come to a final decision.
Sterling has been falling the last month or so.
All good news fo us shareholders as it makes an bidding war more affordable for Disney and Comcast.
I expect £15 pls as the final price.
Just want the Culture Secretary to get the finger out.
Formal bid now received so let's see what happens.
One thing I didn't appreciate before was that 21st Century Fox's bid need to be approved by a majority of independent (i.e. non Murdoch) shareholders. I was kind of worried that they'd somehow get over the line with the acceptances of a few tracker funds etc.
Let's see what response there is from 21st Century Fox (they have already issued a statement) or even Disney.
According to the RNS today, Sky has yet to receive a written offer after Comcast announce a bid towards end of February.
I was under the impression that a bidder is required to make a bid or withdraw intention within 28 days, due to Takeover & Mergers Rules. Seems I am obviously wrong. Anyone know whether not following up a bid with a written offer is common? I would hate to think what price Sky would be taken over at should Comcast not bid.
Business is humming along - plainly £10.75 was a steal.
I can see a final price at £15 due to the final coal performance, strategic value of the business (with NowtTv they gain a presence in OTT streaming) and fact two giants are after them.
Hopefully will get a sensible decision by the government (not to be taken for granted looking at this last week).
"Richard Hunter, Head of Markets at interactive investor, commented "In media terms, LSE:SKY:Sky is currently the belle of the ball, attracting overseas suitors aplenty. This update is another vindication of the interest being shown.Even with its ..."
Cimbom, you don't talk a lot of hot air mate. You are honestly saying that you think the price of Sky is not impacted by takeover bids from Fox and Comcast and the takeover of Fox assets by Disney?
Your answer to the question is a terrible answer.
To explain the situation fully is not simple but here is my attempt:
- 21cFox, which already owns 39% of Sky, originally bid 10.75 which was accepted by Sky but is still going through regulatory clearance.
- During the bidding process Fox agreed to sell some assets including it's stake in Sky to Disney, however they still said that they would but the other 61% of Sky and sell it immediately onto Disney.
- Originally it was claimed by Disney that under takeover rules it would not need to bid for the rest of Sky when it buys the 39% stake (was never really sure of their rationale as the rules say you must bid for the whole company when you buy over 30%), but the takeover panel now say they must.
- In the interim period Comcast have offered 12.50p a share
- Also in interim period Sky renewed their PL rights in the UK at lower costs than they previously were which was seen as a very good result.
All in all who knows what will happen now, will Fox bid more if so why are they just want to sell it straight to Disney, will Disney bid on their own, will Comcast bid be accepted or would they bid higher if Fox or Disney bid again. All in all no idea what the end result will be, but to claim that the takeover situation is not driving the price is madness.
Statement from 21st Century Fox Regarding The Takeover Panel's Ruling
New York, NY, April 12, 2018 - 21st Century Fox ("21CF") notes the announcement today by The Takeover Panel regarding the requirement for The Walt Disney Company (Disney) to make a mandatory offer, at a price of £10.75, to the holders of ordinary shares in Sky PLC (Sky) pursuant to Note 8 on Rule 9.1 of the Takeover Code as a result of Fox's stake of approximately 39% in Sky.
Under the ruling, any mandatory offer by Disney would only be required after Disney's acquisition of 21CF is completed, which 21CF currently expects to occur after completion of 21CF's offer for Sky. 21CF also notes that the ruling provides that an offer would not be required if 21CF has previously acquired the entire ordinary share capital of Sky and that the offer would be at a price of £10.75 per Sky share, the same price as 21CF's existing offer.
21CF remains committed to its recommended cash offer for Sky announced on 15th December 2016, which is supported by revised remedies recently offered to the Competition and Markets Authority (CMA) with whom 21CF has been co-operating in order to bring the UK regulatory process to a swift and satisfactory conclusion.
You are not the only one. My interpretation is simple but many may not agree.
There is no viable takeover bid for SKY from any party at present. Market price is just over £13. Fox bid was luckily delayed by the government and @ £10.75 is already dead and buried. Comcast bid never materialised in an official capacity.
Hence we are back to normal. Market price and company performance rule.
No, Sky shareholders own 100% of Sky. You are misunderstanding the fact that the largest shareholderr, Murdoch, owns 39%. As the either Disney owning Sky News and Comcast owning the rest, Comcast haven't made a formal offer and so this proposal by Sky is to smooth out the overall sale to Disney in the long run.
It helps with the sequencing. If would allow DCMS to permit the Fox/Sky transaction conditional on the sale of Sky News. After the former, Fox would own 100% of the business so the shareholders like ourselves would be irrelevant.
The overall good news is that they are in it to win it so a takeover battle is well and truly on from what I can see.
Sky is proposing to sell Sky News to Disney - I wonder if they have the authority to do that as they only own 39% ? It may leave the auction between Fox and Comcast to be more interesting though.
I wonder what Disney would do with Sky News if Comcast buys the rest of Sky?
I have been waiting to a RNS confirming that written offer by Comcast has been made to SKY. Have I have missed it? The Senior Independent Director had previously said that they are duty bound to consider it and then accept/reject it. If they recommend it, the offer from Murdoch would lapse, unless Murdoch decides to increase the offer previously made.
Can anybody throw some light on whether Comcast Offer has been received by Sky? And if so, what is the Independent Directors' recommendation?
Today we have announced a new partnership to bundle the full Netflix service into a brand-new Sky TV subscription pack. This pioneering partnership will give millions of Sky customers seamless access to Netflix through the Sky Q platform.
We will make the extensive Netflix service available to new and existing customers by creating a brand-new and attractively priced entertainment TV pack, combining Sky and Netflix content side by side for the first time.
With the Netflix app integrated into Sky Q, and Netflix programmes promoted alongside Sky content, customers can enjoy shows such as Britannia, Billions and Big Little Lies alongside The Crown, Stranger Things and Black Mirror, as well as free to air TV, all on the Sky platform. At the same time, customer will enjoy the simplicity of one monthly bill and easy to use integrated user interface.
As part of the new partnership, Sky customers will be able to seamlessly access Netflix content in the Sky Q menu, plus quickly find their favourite Netflix programmes including the use of Sky Qs search and voice search functionality. Existing Netflix customers will be able to easily migrate their account to the new Sky TV bundle, or sign into the Netflix app using their existing account details, to enjoy Netflix with even greater convenience.
Jeremy Darroch, Group CEO, told [email protected]:
The exciting new features coming to Sky Q will enable Sky customers to access even more of the best entertainment delivered over the best product platform. By placing Sky and Netflix content side-by-side, along with programmes from the likes of HBO, Showtime, Fox and Disney, we are making the entertainment experience even easier and simpler for our customers. Our recent announcements mean we will extend our leadership in delivering customers the best viewing and user experience in Europe.
This European partnership will see Netflix - along with the new Sky TV pack - launch on Sky Q in the UK and Ireland in the coming year. Netflix will launch on Sky Q platforms in Germany, Austria and Italy thereafter.
The agreement with Netflix also extends to Skys contract free streaming services. In the UK and Ireland, Sky will launch Netflix as a standalone app on NOW TVs family of streaming devices including on the NOW TV Smart Stick which was recently launched in the UK. Sky Ticket in Germany and Austria, and NOW TV in Italy, will launch a standalone app on their devices in due course.
SKY/ FOX/ COMCAST - IMPLICATIONS OF COMCAST POSSIBLE OFFER (SQUARE)
2018-02-27 17:05:33.900 GMT
We think important to clarify / re-iterate a few technical points which may
educate deal dynamics here:
* Fox cannot withdraw its £10.75 bid for the fully diluted share capital of
Sky which it does not already own,
* More importantly, Fox cannot tender its 39% stake in Sky to Comcast unless
agreed by both:
1. The UK Takeover Panel, per rule 4.2 of the UK Takeover Code
Restrictions on dealings by the Offeror and Concert Parties;
2. Disney itself, per point 2.a) Transfer Restrictions of the Voting
Agreement -Exhibit 10.1 of the Fox / DIS Merger Agreement
* Fox needs the approval of Disney to counter the Comcast offer given Fox is
required to seek the approval of Disney to incur any additional
indebtedness above $400m per Fox/Dis Merger Agreement Article V,
Covenants b), iv)
* DIS buying in the market to block Comcast Offer is not a plausible
1. It would contradict the case they made to the Takeover Panel of them
not having to launch a mandatory given buying Sky shares at this
stage would likely fall under significant purpose (per note 8 of
R9.1 of the Code)
2. Also, under rule 9.5, this mandatory offer would need to be in cash
and at the highest price paid by the offeror for Sky shares in the 12
months before the offer was announced
In light of the above, it is fair to say that DIS is now effectively in
control of what will happen with the Sky / Fox scheme in terms of price level
* The cleanest way for DIS to completely block Comcast would be to allow
Fox to pay up substantially
* Ideally they also manage to gather ~10%+ irrevocables which would
ensure Comcast then does not reach its 50%+ acceptances
* In a potential bid war scenario, gathering irrevocables could
prove extremely tricky at best they would be soft with a
collar i.e. fall away in case of higher Comcast offer of x%
We think if DIS decides they need 100% of Sky, they may have to pay up in the
* They are facing a Comcast with sizeable firepower - though it would
already reach a 3.0x PF leverage, adding - say - half a turn gives them an
additional envelope of c.$15bn cash to deploy
Safe to say Comcast does not seem to be in for the 100% of Sky, nor can they
really count on it
* This takeover offer is a defensive move engineered to force some kind of
distribution / content agreement partnership with Disney once they are a
majority owner of Sky
* Michael J. Cavanagh (CFO) during Investor Call Q&A argued he had no
preference between majority and 100% ownership
If DIS decides it is not financially viable anymore for them to pay up for the
100% control of Sky, they have two options:
1. No improvement to scheme offer price Fox Scheme voted down but DIS still
ends up owning 39% in Sky upon completion of Fox deal
2. No improvement to scheme but - with the Panel blessing - DIS lets Fox
monetise the 39% Sky stake with £12.50 Comcast Takeover Offer
* This would lead to, in a way, a cleaner ownership structure for the
The above all boils down to the relative players strategic objectives which
no outsider can really put a price tag on
Sky Independent Board Recommendation is still uncertain
* On paper, absent any counter offer from Fox, Sky Independent Board would
likely change their recommendation for the Comcast offer which also
carries less execution risk from a regulatory standpoint
* However, the weak point in the Comcast offer is the deliverability by
way of acceptance threshold
* Even as low as 50%+1, it could prove tricky if you count out the
Murdoch stake and the tracker funds
* Note: once the Takeover Offer is launched, Comcast would be able to buy in
the market and these would count toward acceptances
* Note: a change of Sky Board recommendation would lead to termination
True - but it is a greater hurdle to get an effective controlling stake starting from a 39% base than Comcast's zero.
Also, I think that y the end it, there will be a 5% at least difference between the final offers by each company. The directors will need there to be a clear difference between the bids to enable them to recommend one over the other, not just tuppence a share.
Fox have the advantage in them already having the 39% shareholding. I presume they are taking now to Disney about how the extra cash is financed and then they just flip it to them.
It will have to be an improved offer because the current independent directors (am not sure about the validity of that term as they have been happy to take the shilling for so long) can't justify the current £10.75.
Option d I would put at less than 0.1%. Stranger things have happened but the genie is out of the bottle.
so, in your (or anybody else who may wish to comment) opinion, do you:
a) see Comcast as the owner at the initial price or one higher than mentioned?
b) see Fox as the owner with an improved offer?
c) see Disney entering the fray with a direct offer themselves?
d) Nothing changing?
The releases Comcast have made indicate that this is just the first offer.
First of all - they stress that this is a 'superior offer' or to put it another way.
'Independent directors conduct a proper auction or you will be sued'.
Second - they mention that the price they are bidding would lead to an improvement in Comcast's free cash flow per share in year one. What kind of bidder says that? One who knows they will have to pay more.
This opening gambit is basically to freeze the momentum towards sky and i fully expect a further iteration from Comcast and Fox/Disney.
I thought the bid was undervalued and that the premier league action added 100p to Sky's value. Is well worth the hold with a downside of £12.50.
Pyueck, I was primarily pointing out the price in February 2016 @ £11 and the manner it got suppressed to ~£9.00 (not sure exactly what it was on the day of the bid) through the purchase of SKY Germany and Italy. Hence the markets valued SKY @ £11 the same year irrespective of what you or I think.
We have always had differences of opinion but the company was no different to that on Feb 2016, hence undervalued @ £10.75, that is the point.
Cimbom, while I have already eaten my humble pie. I should say that I never said the deal will not go through or that another bidder wouldn't come in. I said that in my eyes, especially with the huge risk of the PL rights £10.75 was a fair price and one that shouldn't be sniffed at. I was, am still am bearish on Sky's long term proposition, but fully appreciate that the latest PL rights deal was a very positive one for Sky.
Yes events have gone Sky's way, the PL rights was an excellent result for Sky and as per my note at the time I think Fox was cheeky thinking that they could get the benefit of this without paying more, as if the PL rights was lost I strongly believe Fox/Disney would have walked.
The P/E ratio is now approaching 34, so I cannot really fathom why anybody could argue that the new bid is undervalued. However I have no idea what Disney, Fox or Comcast will do next and I wouldn't rule out a bidding war.
I read questions being raised belatedly about Fox selling Sky Germany and Italia and subsequently buying them back through SKY deal. That was one of the actions Fox/BSkyB directors took to suppress Sky share price creating a big debt in Euros, particularly post Brexit, appearing like an increasing liability. Of course once share price was suppressed, £10.75 looked like an attractive offer to some!
Not really, the 10p 'special dividend' is about one third of what would have been paid during 2017 and even the Murdoch's wouldn't try to get away with indefinitely suspending dividend payments. It's not as black as I painted it but history shows a couple of attempts to get full control of Sky at pretty average prices.
I think this what appears to be an "agreed bid" looks like a con to boost share price perhaps to aid Sky's creditworthiness. Fair price is at least £14.
Sky is producing a lot of cash, hugely profitable, very successful in dramas, retained all important PL, now likely to make positive impact to customer retention with Sky mobile. NOW TV is making huge contribution and expanding in many countries, with Sky Q a huge success, Sky broadband well positioned to take over first spot from BT...most important of all businesses being tuned around in Germany and also in Italy; future is bright.
£10.75 is a con! I would vote against!
By the way, as we all know this bid did not happen overnight, therefore pre-bid price is actually ~ £11; price of shares at the beginning of 2016! One way or another manipulation of directors if there is any and FOX would be exposed unless they pay the fair price for the company! The deal at £10.75 is dead!
You have forgotten that in addition to the 10p dividend paid for the deal not being completed by the 31st December 2017, a further 13p per share is due shortly becuase of the increased value in the company following the half year results
Obviously delighted about this from the perspective of getting more for my shares.
But equally delighted that the sheer meanness of Fox looks like it's bitten them back. Not just the 1075p offer which was hurriedly accepted by Gilbert and the other 'independent directors' but the strange decision to suspend dividends during 2017 for a process that one man and his dog could see was going to have regulatory complications.
Let's hope the Sky deal goes through at this or a higher price and the Disney/21st Century Fox deal unravels as a result.
Even if Disney had separately bought the Sky stake from Fox, they still would have had to offer to buy the remaining shares at the price they bought it from Fox. This just means not starting a process from scratch.
You might be right, not sure the downside is too great unless the Sky board for some reason bat away the comcast offer.
The potential upside is what Fox, or probably more likely Disney do now. Always though the Fox/Disney deal structure was bizarre, for many reasons, including a) why Fox was buying back Sky Italia and Deutschland assets it sold a few years ago at a higher price? and b) why they were still going through the process of Fox getting regulatory clearance when Disney were going to be the eventual owners.
I suspect Fox will be spitting feathers as it puts the whole Fox/Disney deal in jeopardy. Were they buying the Sky assets at a lower price than they were selling them to Disney for, if not why were they bothering with the great hassle of still going through with the Sky deal? Disney are shrewd proud operators, they have told the markets that Sky is joining their family, it will be a blow to their pride if it doesn't.
I guess in a dream world Disney would come back with a higher offer and then Comcast raises its offer again...ad infinitum. Some stocks in the US are priced at crazy p/e ratios and even if I think a higher offer would be crazy, doesn't mean it won't happen.
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