This article is more than 2 years old

This article is more than 2 years old

Rupert Murdoch has upped his offer for Sky to £24.5bn, trumping the offer tabled by rival Comcast and intensifying the bidding war for the broadcaster.

The bid worth £14 per share means Murdoch’s 21st Century Fox will have to pay £14.7bn for the 61% of Sky it does not already own.



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The bid is a significant increase on the £12.50 a share, or £22bn valuation, offer made by its rival Comcast. Comcast must post its offer document to shareholders. It resulted in Sky’s independent directors withdrawing their recommendation to shareholders to accept Murdoch’s first £10.75 offer, to Sky shareholders by Friday.

Murdoch’s all-cash bid, which is 30% higher than his original offer and a 12% premium on Comcast’s deal, has been recommended to shareholders by Sky’s independent committee.

In light of Murdoch’s new bid, Comcast is likely to counter with a new bid this week for Sky, which has assets including Premier League football rights and a production arm responsible for shows such as the dramas Riviera and Patrick Melrose, starring Benedict Cumberbatch.

Murdoch has felt emboldened to forge ahead with a new offer as he is finally set to be given clearance by the government to take over Sky.

The new culture secretary, Jeremy Wright, will clear the bid in an announcement scheduled to be made by the end of the day on Thursday.

Earlier this week, the Guardian revealed that Murdoch would gain clearance to finally take over Sky after 18 months of battling regulatory red tape and political opposition to the deal, and raise his bid.

Wright, who has only been in the job days, will deliver the result on a final consultation on plans to make Murdoch sell Sky News to reduce his control of UK news media. The government said on Tuesday it had only had five responses to the consultation.

As well as selling Sky News, most probably to Disney, Murdoch must also top up any potential shortfall in funding by the channel’s new owner to keep its budget at £100m for the next 15 years.

The battle for Sky is playing out against a larger fight between Disney and Comcast to take over most of 21st Century Fox, which owns 39% of Sky as well as assets including the Hollywood studio behind films such as Deadpool and X-Men.



Last month, Disney, which has offered to buy Sky News from Murdoch to help him secure clearance to buy Sky, upped its offer for Fox to $71.3bn ($38 a share). Earlier in the month, Comcast had trumped Disney’s first offer for Fox ($55.4bn; $28 a share) with a $65bn, or $35 a share, bid.

Fox shareholders are due to vote on Disney’s offer on 27 July, unless Comcast ups its bid again as rumoured.

The spiralling price tag for Fox has significant ramifications on the ultimate price that will be paid to win the separate battle for Sky.

In April, the UK Takeover Panel ruled that if Disney successfully takes over Fox before Murdoch, Comcast or another bidder has taken full control of Sky, then it will be forced to buy out the 61% of the satellite group it does not own.

The panel ruled that Disney would have to buy the stake at £10.75 a share – the now 18-month-old bid price tabled by Murdoch.

This “chain principle” is designed to make sure minority shareholders are treated fairly; in this case to ensure Sky’s minority shareholders receive the same amount as 21st Century Fox.

The rule would also apply to Comcast if it beats Disney in agreeing a deal to buy Fox.

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However, after Disney significantly upped its bid for Fox, the UK Takeover Panel is looking at whether it should be forced to pay a much higher price.

Disney’s new bid for Fox is 36% higher than its original one, which has led analysts to suggest that premium could be extended to Sky to make Disney pay at least £14.62 a share.

The battle for Sky should be over in September, with either Fox or Comcast the winner – unless a surprise new bidder emerges.

This means it is highly unlikely that whoever is ultimately victorious in the hunt for Fox – Disney or Comcast – will find itself having to make a move for an unsold part of Sky when the deal completes in the US next year.



However, the Takeover Panel ruling, which could also be announced this week, could theoretically set a new, higher, price floor for buying Sky than Murdoch’s latest bid.