July 13, 2018 / 10:11 AM / 10 months ago

British regulator sets 14 pound floor under Sky shares

LONDON (Reuters) - Britain’s takeover regulator has decided that Disney (DIS.N) must offer 14 pounds a share for Sky SKYB.L if it succeeds in buying Rupert Murdoch’s Twenty-First Century Fox (FOXA.O), in a key ruling in the takeover battle for the broadcaster.

FILE PHOTO: The Sky logo is seen at the company's UK headquarters in west London July 25, 2014. REUTERS/Toby Melville/File Photo

The price set by the Takeover Panel on Friday is the same as Fox’s current offer for the 61 percent of Sky that it does not already own, which values the London-listed pay television business as a whole at 24.5 billion pounds ($32.2 billion).

But it is below U.S. giant Comcast’s (CMCSA.O) competing 14.75 pounds per share offer for Sky, which has put a 25.9 billion price tag on the business.

The Panel’s ruling is important for investors as it sets a new, higher floor price under Sky shares.

Sky, Fox, Disney and Comcast are locked in a series of interlinked takeover battles, with Fox and Comcast vying for control of Sky and Comcast and Disney battling to buy the bulk of Fox’s TV and film assets, including its 39 percent Sky stake.

The Panel had previously ruled that Disney must make an offer for the rest of Sky if it succeeds in acquiring Fox, including its Sky stake, before either Fox or Comcast have taken full control of the broadcaster.

But the level at which Disney would be required to acquire the rest of Sky has recently been up in the air.

The Panel said in April Disney should match Fox’s first offer for Sky, which was 10.75 pounds a share.

However, Disney last month raised its bid for the Fox assets, including the Sky stake, to $71.3 billion. To ensure all Sky shareholders are treated equally, the Panel hiked the level at which Disney would have to make a mandatory offer for Sky.

The regulator said it had considered “the relative contribution of Fox’s stake in Sky in the valuation work carried out by Disney’s financial advisers” as well’s Fox’s most recent bid for the broadcaster when arriving at the 14 pounds a share price.

The Panel added it had “received submissions from a number of parties expressing diverging views” and that Sky planned to request a review of its decision.

It comes as the battle between Fox and Comcast for Sky intensifies.

On Wednesday, Fox hiked its bid to 14 pounds a share, trumping a 12.50 pound offer Comcast made earlier this year.

But Comcast struck back later on Wednesday with its 14.75 pound counterbid, which Sky’s independent directors recommended to shareholders.

Sky shares were at 15.39 pounds in London on Friday, down 0.4 percent.

The stock is trading above Comcast’s bid amid investor anticipation that Fox will return with a better offer.

Reporting by Ben Martin in London and Arathy S Nair in Bengaluru; Editing by Susan Fenton/David Evans

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