Comcast let Fox’s increased bid for Sky simmer for all of 14 hours before coming back with its own raised stakes. Now, several scenarios have been put in motion.
Last Wednesday, Comcast returned serve on Fox with a £14.75-per-share bid for 60% of Sky, a transaction with an implied value of $34 billion. That bid allowed Comcast to jump out ahead of Fox’s $32.5 billion, or £14 per share, offer tendered earlier in the day, and Comcast's new bid earned the recommendation of the Sky Independent Committee of Directors.
“Comcast has long admired Sky and believes it is an outstanding company and a great fit with Comcast. Today’s announcement further underscores Comcast’s belief and its commitment to owning Sky,” Comcast said in a statement.
At the same time, U.K. Secretary of State Jeremy Wright gave Fox the OK on its Sky deal, provided the company divests Sky News to either Disney or another company. He left the completion of the deal in the hands of Sky’s shareholders.
Jefferies analyst John Janedis said that with all these pieces now in place, a timeline has begun. Comcast now has a 60-day window before Sky shareholders can vote to approve the deal. According to Janedis, within the first 46 days, Comcast and Fox can change the terms of their respective offers, and after that, five days of auctions with one bid per day will kick off. He said if Comcast wins, shareholders continue to tender their shares and if Fox wins, a shareholder vote occurs on day 60.
Janedis laid out four possible scenarios: Comcast outbids Fox for Sky; Fox outbids Comcast and adheres to all conditions; Disney and Fox walk away and sell Comcast the remaining 40% stake in Sky; and Disney wins both Fox and Sky.
But Janedis warned that Comcast will stay in the hunt for Fox.
“We continue to believe Comcast ultimately wants both Sky and Fox assets, and that Comcast will come in with a higher bid for FOX in the coming weeks (prior to the 7/26 FOX shareholder vote),” Janedis wrote in a research note. He added that Disney is currently in “wait and see mode” and could still close its Fox deal by year-end if Comcast doesn’t come back with a higher bid.