Battle for Sky moves to the auction block
Comcast and 21st Century Fox will settle their battle for control of broadcaster Sky through a rare auction designed to put an end to months of offers and counteroffers from the American media empires seeking a foothold in the European pay TV market.
The auction will begin after the London stock market's close today, Friday, and end sometime Saturday evening following a maximum of three rounds of bidding, said Britain's regulator, the Takeover Panel.
Fox started the bidding war last December, when it sought to acquire the 61 per cent of Sky it doesn't already own. Comcast has since offered £26 billion (US$34.3 billion) for Sky, topping Fox's latest bid of US$24.5 billion.
The regulator said it called the auction "to provide an orderly framework for the resolution of this competitive situation", and that the results would be announced "as soon as practicable".
Fox, as the current low bidder, will have the right to make a new offer during the first round of the auction, and Comcast will have the opportunity to counter it during the second round. Both parties will have the chance to make increased offers during the third and final round. All bids must be in cash.
While it will still be up to Sky shareholders to take whichever offer they like best, much of the groundwork for such a decision has already been laid. Simply putting the bids clearly on the table will fill in the last blank, so that Sky is not endlessly in play.
It will also mean that the core value of the combined company won't be eroded in a bidding war, inflicting a "winner's curse" on the buyer.
"The fact the parties agreed to an auction is super significant," said Alice Enders, an analyst who has followed the deal closely. "Neither of the parties have the appetite for that kind of (bidding war)."
Sky is a unique asset. It operates in Austria, Germany, Ireland and Italy as well as the UK. It has 22.5 million customers.
The last time such an auction took place was in 2007, when Tata beat out CSN to buy Britain's Corus, creating what at the time was one of the world's top five steelmakers.
"Comcast and Disney have been playing a game of thrones in the media sector," said Laith Khalaf, a senior analyst at Hargreaves Lansdown. "And the season finale will now take place this weekend."