Fox makes formal £11.7 billion bid to take over Sky as UK government promises a fair hearing
Rupert Murdoch’s 21st Century Fox has tabled a formal £11.7 billion takeover bid for broadcaster Sky. Fox’s offer of £10.75 per share for the 61% of Sky it does not already own values the Game Of Thrones broadcaster at £18.5 billion.
The deal, which shareholders will still have to vote on, comes five years after the media tycoon’s last tilt at taking full control of the business through News Corporation.
That bid was derailed after the company – which owns The Sun and The Times – was forced to abandon the bid when it became embroiled in the phone-hacking scandal involving News International.
21st Century Fox said: “The strategic rationale for this combination is clear. It creates a global leader in content creation and distribution, enhances our sports and entertainment scale, and gives us unique and leading direct-to-consumer capabilities and technologies. It adds the strength of the Sky brand to our portfolio, including the Fox, National Geographic and Star brands.”
Attention will now turn to Culture Secretary Karen Bradley, who has until Christmas to decide whether to refer the deal to Ofcom.
Earlier this week, the Government pledged to be “scrupulously fair and impartial” in its handling of Mr Murdoch’s attempt to gain full control of Sky.
Labour has raised objections to the takeover, and in an urgent question in the Commons said Prime Minister Theresa May must show she will stand by her promise to stand up to powerful interest groups.
Culture minister Matt Hancock said robust procedures are being put in place to ensure Ms Bradley – who can intervene in the deal on public interest grounds – is impartial.
A number of Sky shareholders, including Standard Life Investments and Jupiter Asset Management, have also questioned the offer price since news of the bid broke last week.
But Martin Gilbert, deputy chairman of Sky, has moved to assuage their concerns.
“We, supported by our advisers, believe 21st Century Fox’s offer … will accelerate and de-risk the delivery of future value for all Sky shareholders.
“As a result, the Independent Committee unanimously agreed that we have a proposal that we can put to Sky shareholders and recommend.”
Investors have also raised concerns about the involvement of Mr Murdoch’s son – James Murdoch – who is Sky’s chairman and Fox’s chief executive.
Thomas Moore, investment director at Standard Life Investments, has said that the role of James Murdoch in the two companies means “this can’t be an arms-length deal”.
Fox said that it expects to complete the deal before the end of 2017.
Tom Watson, deputy leader of the Labour Party and shadow secretary of state for culture, said: “This bid was abandoned in the wake of the phone-hacking scandal, and now it’s back. The Secretary of State must refer the bid to Ofcom, to assess whether it would result in too much media power being concentrated in too few hands, and whether Rupert and James Murdoch are ‘fit and proper persons’ to run a broadcaster.
“Fox is attempting to finalise this deal as the Christmas break approaches – but there is still time for the Government to intervene. They must express their view to Parliament before Christmas.
“When she stood on the steps of Downing Street this summer, the Prime Minister said to the people of this country that ‘when we take the big calls, we’ll think not of the powerful, but you’. This is a big call. The Government needs to decide whose side it’s on.”
Richard Marwood, senior fund manager at Royal London Asset Management, said: “We would urge the independent committee of Sky directors, who recommended that shareholders accept the offer, to share more information on the independent financial advice that they based their agreement on.
“Such disclosure would help shareholders assess the fairness of the offer and give greater confidence in the independence of the committee in the bid process.”