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Sky up as investors bet Comcast's raised bid won’t be the last move in the battle with Fox

In early morning trading on Thursday, Sky shares were 2% higher at 1,524p, comfortably above the agreed Comcast cash offer pitched at 1,475p per share, and Sky’s previously agreed bid of 1,400p a share
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Overall, Comcast’s new offer values the satellite broadcaster at US$34bn, topping Fox’s bid of US$32.5bn

Sky PLC (LON:SKY) shares jumped again on Thursday as investors bet that last night’s increased offer from Comcast Corp. (NASDAQ:CMCSA) which trumped a raised bid from rival 21 Century Fox Inc.'s (NASDAQ:FOXA) earlier on Wednesday won’t be the last move in the long-running bid saga.

In late afternoon trading in London on Thursday, the FTSE 100-listed firm’s shares were 2.7% higher at 1,534.5p, comfortably above the agreed Comcast cash offer pitched at 1,475p per share, and Sky’s previously agreed bid of 1,400p a share, which finally got approval from the UK government today.

READ: Sky bid saga continues as satellite broadcaster agrees to increased £24.5bn Fox offer

Laith Khalaf, senior analyst at Hargreaves Lansdown commented: “Red letter days are coming thick and fast for Sky shareholders. Investors are now close to doubling their money as a result of the bidding war for Sky, and there may yet be another twist in this tale which will swell their coffers even more.”

Overall, Comcast’s new offer values the satellite broadcaster at £25.9bn, topping Fox’s bid of £24.5bn.

Comcast said its new cash offer has been recommended by Sky’s independent committee of directors and that it has committed financing required for the deal.

The US company - - which owns CNBC, NBC Universal and Universal Pictures - also said it has received regulatory approvals in the EU, Austria, Germany, Italy, and Jersey and expects to complete the acquisition before the end of October 2018.

READ: Clash of the (media) titans: What is driving the Fox, Comcast, Disney bidding war over Sky?

Rupert Murdoch’s Fox, which already owns a 39% stake in Sky, had seen its increased offer also recommended by Sky’s independent committee of directors.

Fox initially launched a 1,075p per share agreed bid to buy Sky in December 2016.

However, the around £19bn takeover bid was then embroiled in a takeover probe until June this year when the UK government conditionally approved the deal as long as the Sky News business is sold off to a “suitable third party”.

On Thursday, however, the UK government finally cleared the Fox bid for Sky, with culture secretary Jeremy Wright saying: "It is now a matter for the Sky shareholders to decide whether to accept 21st Century Fox's bid.”

In a response statement, Sky said it welcomed the culture secretary’s comments that this now marks the final stage of the public interest consideration of this case.

The group added: “21CF's offer for Sky has now cleared its outstanding regulatory pre-conditions.  This follows the satisfaction by Comcast on 15 June 2018 of its outstanding regulatory pre-conditions, meaning both offers for Sky are now capable of being put formally to Sky Shareholders.”

Wright's predecessor Matt Hancock said last month that Fox's proposal to sell Sky News to The Walt Disney Company (NYSE:DIS) or to an alternative buyer, was likely to be the best remedy to assuage concerns about the extent of Murdoch's influence over the media in Britain.

But, by then, Sky had pulled its recommendation for Fox’s initial offer after Comcast swooped in with a £22bn bid in April.

Fox bid situation

Aside from the Sky bid, Comcast - which owns CNBC, NBC Universal and Universal Pictures – is also battling with Walt Disney for a swathe of assets from Fox itself.

Last month, Disney launched a US$71.3bn offer for the assets, which include the Twentieth Century Fox film and TV studio as well as the US cable networks and regional sports channels, trumping a US$65bn deal tabled by Comcast earlier in June.

Not up for sale are Fox News, Fox Sports 1, the Fox broadcast network or its television stations, which - irrespective of who eventually wins – will be spun off into a new company, for the moment, dubbed New Fox.

Hargreaves’ Khalaf said: “Of course, it’s not only Sky which is on their radar, 21st Century Fox is itself the subject of a bidding war between the two media giants, with Disney currently in pole position. Disney has offered $38 a share for Fox, though the current Fox share price of $47.50 suggests the market thinks Comcast hasn’t thrown in the towel just yet.”

He added: “There is the question of whether Disney and Comcast are paying over the odds for Sky, after all, no matter how many synergies and strategic benefits you can wring out of a takeover, it’s hard to see how you can double the value of the acquired company.

“However, Sky investors won’t worry too much about that. There may or may not be a further chapter in this story, but either way there’s a pretty happy ending for Sky shareholders.”

However, analysts at Macquarie seem to believe that Comcast could have won the day, as they have reportedly cut their rating for Sky today to ‘neutral’ from ‘outperform’, with the Australian bank keeping a 1,450p price target on the stock.

In early New York trading, Fox shares were 0.4% lower at US$47.21, while Comcast added 1.1% at US$34.14, and Disney was up 0.8% at US$108.83.

 -- Adds US share prices; Sky response to UK government Fox bid clearance --

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