Comcast Corp. and 21st Century Fox are settling their bidding war for Sky PLC this weekend in a rare takeover auction.
The auction, which was announced by the U.K. Takeover Panel on Thursday, will effectively put an end to the tug-of-war between the two companies that began in December 2016 when Fox FOXA, -0.07% made an all-cash offer to buy the portion of Sky SKYAY, -1.16% it didn’t already own. Fox currently owns 39% of the British broadcaster.
Fox’s initial offer for Sky came to £10.75, or $14.27, per share. But after the offer hit several regulatory roadblocks, Comcast CMCSA, +0.34% got involved. In February, the NBCUniversal owner made a surprise bid of £12.50 per share, which Fox one-upped in July with an offer of £14 a share. That same month, Comcast came back with a bid of £14.75, valuing Sky at $34 billion.
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Here’s what to expect this weekend.
How the auction works
The takeover auction started Friday at 5 p.m. London time (12 p.m. ET) and will end on Saturday evening, according to the U.K. Takeover Panel. There will be a maximum of three rounds of bidding, and offers must be submitted in British pounds.
As the party with the lower standing bid, Fox will get to make the initial offer in the first round. During the second round, Comcast can make a counteroffer. If there isn’t a clear winner after the second round, both parties can submit sealed bids in a third round of bidding.
Read: Day-long blind auction to decide whether Comcast, or Disney and Fox win control of Sky
The Takeover Panel said it will announce the results of the auction by 7 a.m. London time (2 p.m. ET) on Monday. There is a possibility that the final offers will end up being the same, the Takeover Panel noted.
Sky’s board and shareholders have until October 11 to accept one of the offers.
Pricing
Sky is trading at £15.85 a share, above Comcast’s most recent offer of £14.75 a share. Analysts say this is an indication of what investors are expecting from the auction.
“There’s an expectation that Sky will go at a higher price than what was offered,” Dave Heger of Edward Jones told MarketWatch. “It will be an interesting end to the whole process.”
The Disney factor
Both Comcast and Fox see Sky as a way to expand their global reach, specifically in Europe, said Heger. He thinks that even if Comcast wins the auction and becomes the majority owner of Sky, the NBCUniversal owner will still try to acquire the remaining 39% from Walt Disney Co. DIS, -0.91% And if Fox wins, Disney may look to buy the rest of Sky in order to consolidate its ownership.
Some say the ultimate beneficiary here could actually be the Disney, which recently agreed to buy several of Fox’s media assets, including Fox’s current 39% Sky stake, for $71 billion. The higher bidding prices go, the more Disney stands to gain, as that would drive up the value of the stake it will soon acquire from Fox.
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