Walt Disney Co. must make an offer for Sky Plc if its $52.4 billion purchase of most of 21st Century Fox Inc. succeeds, the UK Takeover Panel ruled.
Disney would have to bid 10.75 pounds per Sky share upon completing the acquisition of Fox assets, which include an existing 39 percent in Sky, and if Fox or Comcast Corp. don’t first buy the European pay-TV company, according to a statement from the panel. That’s the same price offered by billionaire Rupert Murdoch’s Fox to Sky shareholders in 2016 for the stake it doesn’t already hold.
The decision may disappoint some Sky shareholders expecting Disney to be forced into a higher mandatory offer.
However, it also means they have a likely bidder for the business and a price floor should the Fox takeover be blocked by UK regulators and if Comcast doesn’t formalise its proposed 12.50 pound per share offer for Sky.
“It’s very good news,” said Crispin Odey, founder of hedge fund manager Odey Asset Management, which owns a 0.8 percent stake in Sky according to data compiled by Bloomberg. “Disney have underpinned the 10.75 bid.”
The ruling settles months of speculation regarding whether Disney would have to make a direct bid for Sky after Disney’s December offer for the bulk of Fox’s media and entertainment assets. At the time, Disney said it didn’t think it should be forced into bidding for Sky.
The panel’s decision was based on a determination that securing control of Sky “might reasonably be considered to be a significant purpose of Disney’s acquiring control of Fox,” according to the statement. A bid at 10.75 pounds a share values all of Sky at 18.5 billion pounds ($26 billion).
Sky shares were mostly unchanged at 1,311 pence as of 11:41 a.m. in London. In a statement, Sky advised shareholders to take no action on the Takeover Panel decision.
Hedge fund shareholders of Sky including Polygon Global Partners LLP had called for a mandatory bid for Sky by Disney at a higher price than the Fox offer. While the Takeover Panel only requires a 10.75-pound-per-share bid from Disney, the company will have to offer much more to take on Comcast, Odey said.
“All of us really believe it’s going to end up in a bidding war,” Odey said, speculating that as high as 16 pounds per share could be offered. “We’ve got two big gorillas, neither of whom likes to lose. And they’ve got quite a good prize.”