Comcast Tops Disney/Fox in $40 Billion Battle for Britain's Sky TV

Comcast Corp. (CMCSA)   has outbid rivals Walt Disney Co. (DIS)   and 21st Century Fox (FOX)  for the right to buy the outstanding shares of Britain's Sky plc (SKYAY) , the U.K. Takeover panel said Saturday.

Comcast's final offer, in the third and ultimate round of bidding in the rare two-day auction, was £17.28 per share, the Panel said, a price that tops the £15.67 per share bid put forward by Disney/Fox and is some 17% higher than Comcast's July offer. The bid values Sky, Europe's biggest pay TV broadcaster, at more than £30.2 billion ($39.5 billion). 

"This is a great day for Comcast," said CEO Brian Roberts. "This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally."

"We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018," he added in a statement.

Sky shares closed at £15.85 each after rising 0.3% in Friday trading, extending their year-to-date gain to 58.17% with a market value of just over £27.2 billion.

Sky shareholders will now have two weeks, under Takeover Panel rules, to evaluate the Comcast bid and decided whether to tender their shares.

"As the price of the final Comcast offer is materially superior, it is in the best interests of all Sky shareholders to accept the Comcast offer," Sky said in a statement following the Panel's auction announcement.

Disney, which paid $71.3 billion for Fox earlier this year, will own the 39% stake in Sky that was under under the group's control and can decide if it wishes to retain it or sell to Comcast at the bid price established in the two-day auction.

Comcast, which has has received quick and easy regulatory clearances from regulators in both Europe and the United Kingdom, will now wait for shareholders to confirm or reject its bid, and with the £17.28 price coming somewhere in the middle of the higher end of expectations, it will be interesting to see whether the activists that have piled into the stock this year will be satisfied with the outcome.

Activist investor Crispin Odey, who founded Odey Asset Management, had said he thought the bidding could reach £18 a share, a price that would value the group at £50 billion ($66 billion). Macquarie's Guy Peddy said the outcome was likely to be closer to £16.50 per share.

Disney/Fox also has the option of holding on to its stake even if Comcast prevails, a tactic which would allow it to wait-out changes in the global streaming and media landscape, particularly following next year's EU exit by the United Kingdom and the evolving regulations on data privacy and media hegemony from both London and Brussels.

The European media sector is also undergoing major changes, with Italy's Mediaset, the nation's biggest private broadcaster, hinting earlier this month that they're "working on something big and something complex", according to CEO Pier Silvio Berlusconi, following its failed takeover of France's Vivendi.

Disney/Fox, along with activists who've booked some pretty solid gains and are playing with house money -- Sky has risen some 58.3% since the start of the year -- couldn't be blamed for wanting to watch those developments unfold before cashing out.

However, the Comcast victory also scuppers Disney's plans to rollout a global streaming service for its digital content to take on rival Netflix Inc. (NFLX) , which last week unveiled a tie-up with Sky called 'Ultimate on Demand'.

Sky has around 23 million customers across five European countries, including the United Kingdom, and would have been a significant launch pad for Disney's international ambitions. 

More from Markets

How to Be a Tactical Investor in the Current Market

How to Be a Tactical Investor in the Current Market

As Canada OKs Pot, Research Advances Could Follow

As Canada OKs Pot, Research Advances Could Follow

Stocks Fall as IBM Takes a Bite Out of the Dow

Stocks Fall as IBM Takes a Bite Out of the Dow

Prudential Financial Gains After U.S. Says It's Not Systemically Important

Prudential Financial Gains After U.S. Says It's Not Systemically Important

Retailers Like Target and Amazon Plan Massive Holiday Hiring, Says Report

Retailers Like Target and Amazon Plan Massive Holiday Hiring, Says Report