Shares in Sky jumped 32 per cent on Friday after Rupert Murdoch’s 21st Century Fox tabled a takeover bid for the company. The independent directors of both firms said they have reached agreement on a price of £10.75 per share, valuing the company at £18.5bn – a 40 per cent premium on Sky’s share price before the offer was announced.
There are still “certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox”, Sky said. Fox currently owns 39 per cent of Sky and is bidding for the remaining stake, five years after its previous approach hit the buffers as Murdoch's media empire was engulfed by the phone hacking scandal.
Investors have raised concerns over the independence of Murdoch's son, James, who is the chairman of Sky's board and chief executive of Fox.
In a statement Sky said: “The Independent Directors of Sky plc ("Sky") note today's share price increase, and announce that Sky has received an approach from 21st Century Fox, Inc. ("21st Century Fox"). After a period of negotiation, the Independent Directors of Sky and 21st Century Fox have reached agreement on an offer price of GBP10.75 per share in cash, less the value of any dividends subsequently paid by Sky (the "Proposal"). However, certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox, nor as to the terms of any such offer.
"The Proposal represents a premium of 40 per cent to the closing price on 6 December, being the last business day prior to the initial proposal being received from 21st Century Fox, and a premium of 36 per cent to the closing price on 8th December, being the last business day prior to this announcement."
The US entertainment giant's previous attempted takeover of Sky in 2010 was derailed the following year after widespread opposition as well as the fallout from the phone hacking scandal. That deal had been referred to the media regulator Ofcom to consider whether it would damage media plurality.
The new bid will be the first test of UK media regulation under Theresa May's premiership. Last time around, the then culture secretary, Jeremy Hunt attracted heavy criticism for his apparently friendly relationship with James and Rupert Murdoch.
Fox is now separated from News Group's newspapers, so it is unclear whether regulators will scrutinise the latest bid to the same degree.
Rupert Murdoch, who founded Sky in 1989, controls the majority of Sky's shares and also owns the country's largest newspaper group, News UK.
