On Wednesday, U.S. cable giant Comcast Corp. entered an offer of £22 billion equal to $31 billion to acquire pay-TV Sky, challenging the already agreed to but lower bid for takeover by Fox, a Rupert Murdoch owned company.
Comcast, which outlined its offer in February at the same share price of £12.50, said it is going to continue engaging with the independent directors at Sky with a goal of obtaining a recommendation for the deal.
21st Century Fox, which owns 39% of Sky already, said it was committed to its cash offer to obtain Sky of December 15, 2016, and currently was looking at its available options and would make an announcement in due course.
The £10.75 per share deal of Fox has been kept from closing by regulator’s scrutiny over concerns of influence by Murdoch could have if he owned so many broadcasters and newspapers.
Fox in the meantime agreed to liquidate many of its television and film assets by selling them to Walt Disney, including its Sky stake.
Comcast, the owner of Universal Pictures and NBC, said it was pleased it could formalize its offer. Its CEO and chairman Brian Roberts said Comcast has long thought Sky to be an outstanding company and excellent fit for Comcast.
Sky has great customer loyalty and valued brand and is a strong business. Shares of Sky traded up over 3% during midmorning trading in London.
Murdoch is left to decide if he should increase the bid by Fox to stave off the challenge made by Comcast, raising the possibility of creating a bidding war.
One London analyst said this could create a bidding war as a formal proposition has been submitted by Sky and not just a suggestion.
Comcast is expecting the deal for Sky to generate run-rate annual synergies of $500 million through recurring cost savings and revenue benefits.
Comcast added that acquiring Sky would help to invest in programming, innovation as well as significantly expanding its footprint internationally.
About one quarter of sales at Comcast would be generated overseas following a successful acquisition compared to only 9% at the current time, said the company in its announcement.
Regulators continue with their attempt to decide if they will approve the original bid by Fox for Sky in the UK with that decision expected sometime in June from Matt Hancock the Culture Secretary.