Regulator sets £14 floor under Sky shares as takeover battle continues

The Takeover Panel hiked the level at which Disney would have to make a mandatory offer for Sky

The UK broadcaster is at the centre of a bidding war (Reuters)

Britain’s takeover regulator has decided that Disney must offer £14 a share for Sky if it succeeds in buying Rupert Murdoch’s 21st Century Fox, in a key ruling in the takeover battle for the broadcaster.

The price set by the Takeover Panel on Friday is the same as Fox’s current offer for the 61 per cent of Sky that it does not already own, which values the London-listed pay television business as a whole at £24.5bn). But it is below US giant Comcast’s competing £14.75 per share offer for Sky, which has put a £25.9bn 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 per cent 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 a share.

However, Disney last month raised its bid for the Fox assets, including the Sky stake, to $71.3bn (£54.2bn). 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 as Fox’s most recent bid for the broadcaster when arriving at the £14 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 a share, trumping a £12.50 offer Comcast made earlier this year.

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

Reuters