Rare showdown could decide the fate of the Sky broadcaster

LONDON (Reuters) – A $ 34-billion bidding war for the European Sky channel (SKYB.L) between US competitors Comcast (CMCSA.O) and the twenty-first century Fox (FOXA.O) will probably be settled by a quick-fire auction Saturday.

The UK buyout group, which regulates mergers and acquisitions, said on Thursday that it is preparing to step into the battle for the London-based British company by holding an auction for three rounds in the UK. maximum. .

The process will begin if Comcast or Fox Rupert Murdoch, who has the support of his partner Walt Disney (DIS.N), are still competing for Sky at 17:00 London time (16:00 GMT) Friday, said the Panel.

The auction will take place the next day in private and should end in the evening, when the regulator will announce the level of offers submitted by the contenders.

This would be a spectacular resolution of Sky's fate, which has been in the air since Fox made his first bid on the 61% of Sky he did not already own in December 2016.

The takeover of Fox was delayed by a prolonged regulatory review of the proposed deal and the Comcast cable giant was crushed early in the year.

Comcast is currently leading Fox with a £ 14.75-share offering for pay-TV group control worth £ 25.9 billion ($ 34.2 billion) and has been recommended to investors by directors independent of Sky.

This surpassed the 14-pound offer Fox made last July and 37 percent above Fox's initial offer of 10.75 pounds in 2016.

Sky shares rose less than 0.1% to 15.81 pounds on Thursday.

"Shareholders will be delighted with the way it all worked, having seen the stock price double before Twenty First Century Fox's initial offering almost two years ago," said Laith Khalaf, an analyst at Hargreaves. Lansdown.

The British hedge fund manager Crispin Odey, whose company is a shareholder of Sky, has already stated that the company should be valued at at least 18 pounds per share.

"At the end of the day, we still have the ability to say no, sorry, you still have not bid enough," he told Reuters on Thursday.

Fox is fighting for the broadcaster with the financial backing of Disney, which in June signed a separate deal for the purchase of Fox's television assets and movies, including its 39% stake in Sky, for about 71 billions of dollars.

The fight for society is part of a larger battle in the entertainment industry with the growth of Netflix (NFLX.O) and Amazon (AMZN.O) force the world's traditional media giants to spend tens of billions of dollars to keep up.

GREATEST AUCTION

Sky was created in 1990 when Murdoch merged its new British satellite television service with a competitor and is a broadcaster of sports, movies and television shows.

An auction for Sky, which broadcasts to 23 million households in Europe, would be the largest transaction ever concluded in the UK and decided by a panel auction.

There have been only three UK buyouts since 2007 in which the regulator has auctioned, including the £ 6.2bn sale of Anglo-Dutch steelmaker Corus to India's Tata Steel (TISC.NS), according to a Reuters analysis.

The last time the Panel invoked the proceedings was in 2012, when it was almost involved in the battle for Cove Energy until Royal Dutch Shell (RDSA.L) abandoned its bid to buy and left the Thai company PTT Exploration & Production a $ 1.9 billion deal for the gas explorer just before the start of the auction.

In the first round of the proposed Sky auction, the lowest-priced bidder, Fox, could bid higher.

In the second round, only the other contender, currently Comcast, would be allowed to increase his bid. They would not bid and would be aware of the outcome of the first round, a source with direct knowledge of the situation.

If the second round draws an auction, the Panel will proceed to a third step when the two contenders will have the opportunity to soften their bids in what would essentially be sealed bids. In this round, Fox and Comcast can make their offers depend on each other by making a new offer.

It is possible that the fight could end with Fox and Comcast offering the same price for Sky, said the regulator.

The Panel has not established any rules governing the response of Sky's independent directors once the sale is completed.