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Comcast outbids Fox to buy Sky for ?30bn

Comcast emerged as the winner of an extraordinary battle for control of Sky after it defeated the combined forces of 21st Century Fox and Disney in an extraordinary 24-hour auction.
The colossus of the US cable industry, which also owns the Hollywood studio universal and the broadcaster NBC, made a blind bid ?17.28 per share for Sky, valuing the company at nearly ?30bn.
Comcast came out comfortably ahead of Fox, which was effectively controlled in the 24-hour sale by Disney. The Star Wars maker has agreed to buy most of Fox, including its 39pc stake in Sky, in a separate $71bn (?54bn) deal.
At the 5pm deadline Sky’s biggest shareholder made a final offer of ?15.67 per share, less than the market value going into the auction. The highly unusual process to settle the takeover battle was overseen by the Takeover Panel, the City’s merger regulator.
The Fox bid fell about ?2.8bn short of Comcast's, which represents 15.5 times Sky's adjusted earnings.
Sky’s independent directors, led by deputy chairman Martin Gilbert, the joint-chief executive of investment giant Standard Life Aberdeen, quickly recommended Comcast's offer to shareholders. Sky chief executive Jeremy Darroch was also fielding bids from Comcast and Fox alongside a phalanx of bankers and lawyers.
Mr Gilbert said tonight: "We consider the Comcast offer to be an excellent outcome for Sky shareholders, and we are recommending it as it represents materially superior value.
"We are focused on drawing this process to a successful and swift close and therefore urge shareholders to accept the recommended Comcast offer."
It signals a major defeat for the Murdoch family in their long pursuit of full control of Sky. Their first bid collapsed in 2011 as the phone hacking scandal enguled their newspapers.
Comcast / Fox / Sky / Disney timeline
This time Fox agreed to acquire the 61pc of Sky shares it did not already own in December 2016. The takeover was heavily delayed by regulatory scrutiny, however, which helped create the opportunity for Comcast to gatecrash the sale.
Rupert Murdoch had intended to sell the whole of Sky onto Disney as part of a break-up of his international entertainment empire. Disney was last night still due to acquire Fox’s minority stake, 
Sky shareholders will now vote on whether to accept Comcast’s bid. They have witnessed the battle for control of the company more than double its price. Hedge funds loaded up on Sky shares in preparation for the final contest and are now sitting on hundreds of millions of pounds in paper profits.
Fox’s own stake, which Disney could choose to cash in, is valued at nearly ?12bn by Comcast’s bid.
Sky shares soar on hopes of takeover battle after cable giant Comcast outbids Rupert Murdoch's Fox
The two sides both sought ownership of Sky in an effort to bulk up to meet the challenge from tech giants.
The rise of relatively cheap subscription streaming services from Netflix, Amazon and others is threatening the traditional pay-TV business and means international scale and direct relationships with consumers are at a premium. Sky has subscription relationships with about 23 million households across Europe, as well as well-regarded technology and customer service operations.
Disney’s chairman Bob Iger, who is investing heavily in a global streaming service to deal direct with consumers, called Sky a “crown jewel” among Fox’s assets. His Comcast counterpart Brian Roberts said it was a “unique asset”.
Mr Roberts said tonight: “This is a great day for Comcast. Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team. This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally."
Comcast said it aimed to complete the takeover by the end of next month.
The auction almost certainly brings to an end a two-year battle over the fate of Sky. It began when Fox seized on a slump in Sky’s share price caused by rocketing Premier League rights costs and the fall in sterling following the Brexit referendum to make a bid for the 61pc of the company it did not already own.
Comcast outbids Fox to buy Sky for ?30bn

Media mogul Rupert Murdoch

Credit:
Jemal Countess/Getty Images North America
Sky’s independent directors accepted a ?10.75-per-share offer that valued the company at ?18.5bn, a premium of 40pc on the market price. The deal drew nevertheless ­criticism from City investors who claimed the board had yielded too easily to the Murdoch approach.
Fox then faced a series of regulatory barriers as critics of the Murdoch family raised concerns about their sway over Britain’s media landscape.
Fox claimed that the proliferation of online news outlets and rise of Facebook, Google and Twitter as distributors, together with the falling circulation of The Sun, meant media plurality was not threatened.
Broadcasting behemoth | The making of Comcast
However, a review of the Fox bid for Sky by Ofcom found that the planned takeover raised concerns. The Government ordered an investigation by the Competition and Markets Authority (CMA), particularly in relation to the impact full ownership by Fox might have on Sky News.
By the time regulatory scrutiny was concluded Rupert Murdoch had agreed to sell most of Fox to Disney. The news in November 2017 that the elderly mogul was prepared to break up the empire he built over decades led to an attempt by Mr Roberts to muscle in on the deal.
After being shut out in the United States, Comcast turned its attention to Sky and in April outbid Fox with a ?12.50-per-share offer that valued the company at ?22bn.
The long-running scrutiny of Fox’s plans meant that without the Murdoch family’s decades of political baggage, Comcast was able to win regulatory approval for its bid within months. Fox finally secured Government approval in July by agreeing to immediately hand control of Sky News to Disney and provide the loss-making channel with a 15-year funding commitment. 
Comcast outbids Fox to buy Sky for ?30bn

Comcast chief executive Brian Roberts

Credit:
Jeff Chiu/ AP
Comcast won its approvals at the same time, however, setting up a straight fight over who would pay the most for Sky. An attempt by Mr Roberts over the summer to disrupt the larger deal between Fox and Disney failed, although he forced Mr Iger to pay about $20bn ($15bn) more than agreed.
On Sky the bidding increased to ?14.75 per share, valuing the company at ?26bn, but neither side blinked before a deadline on Friday, prompting the Takeover Panel to organise the biggest auction in British history.
 
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