Regulators in the United Kingdom have decided that 21st Century Fox (NASDAQ: FOX) can proceed with its planned takeover bid for Sky PLC (LON: SKY). Fox’s offer of £10.75 ($14.40) per share, first submitted in December 2016, values Sky at about 18.5 billion pounds (about $25 billion). Fox has waited 16 months for government clearance for its bid.
To satisfy UK regulators, Fox will have to sell the pay-TV broadcaster’s news division to a suitable third party. Regulators had been concerned that ownership of Sky News would give Rupert Murdoch and his family too much influence over UK media. Murdoch already owns three of Britain’s biggest newspapers: The Sun, The Times and The Sunday Times.
Fox had previously offered to sell Sky News to get regulatory approval for the deal. In a statement, Fox revealed the submission of proposals to the UK government detailing how it would pass along Sky News to Disney (NYSE: DIS). Disney, which owns ABC, is known for taking a hands-off approach with its news divisions and does not have an existing news operation in Britain.
The regulators have also decided that a bid for Sky from Comcast Corp. (NASDAQ: CMCSA) would also be allowed to proceed. In April, Comcast offered to pay £12.50 ($16.70) per share for Sky, valuing the broadcaster at $29 billion. A Comcast bid for Sky would be unlikely to raise regulatory issues, as the cable company has a limited presence in Britain.
The next development could be a bidding war. Sky said in a statement that its directors are “mindful of their fiduciary duties and remain focused on maximizing value for Sky shareholders.”
US media companies that are seeking to expand their international operations have seen Sky as an attractive takeover target. Sky is a leader in pay-TV services in the United Kingdom and other regional markets in Europe. The London-based company has 23 million customers across five countries.
Sky owns lucrative broadcasting rights to English Premier League games, Formula One races, and other sporting events. It also owns movie channels, produces its own entertainment programs, and has a streaming service, Now TV. In addition to these revenue streams, the company also sells broadband and mobile phone services.