Comcast, Fox to settle $35-bn takeover battle for Sky in weekend auction

Auctions are rare in settling a bidding war for a large public company

British regulators said Comcast Corp and 21st Century Fox Inc will settle their takeover battle for Sky PLC via an auction starting Friday, setting up a dramatic climax to a 21-month sale process that has pitted some of the world's biggest media and entertainment giants against each other.   

The UK Takeover Panel said Thursday the auction would consist of a maximum three rounds of bidding, starting Friday and ending Saturday. The winning offer would be announced Saturday, the British regulator said. Offers won't be made public until the auction is concluded. The final round -- if to comes to that -- will be conducted with sealed bids -- secret -- final offers made to the regulator.  

Auctions are unusual for corporate deal making, and extremely rare for settling a takeover of a public company the size of Sky. The British broadcaster has a market capitalisation of more than $35 billion, and a successful bid could likely top that. 

The auction pits Rupert Murdoch's 21st Century Fox, which already owns 39 per cent of Sky, against Comcast. The Walt Disney Co has separately agreed to buy a big chunk of Fox, including its Sky stake. That puts Disney and Fox on the same team in the weekend auction.  

Regulators resorted to the auction, a process that has been used in the past in Britain for much smaller deals, after Fox, backed by Disney, and Comcast engaged in a series of bids and counterbids for the broadcaster. Mr Murdoch has long sought to consolidate his holding in Sky. Disney and Comcast see Sky as way to expand internationally. It sells wireless, TV and internet services throughout Europe, as well as a media company that produces its own news, entertainment and sports programming.

Comcast made the most recent offer in July, for £14.75 ($19.49) a share, valuing Sky at $34 billion. That is above Fox's current bid, also made in July, of £14 a share.

Investors have long expected higher bids. Sky's shares were trading mostly flat Thursday morning in London, at £15.80.

Fox could drop out of the auction before its official start. But Fox has reason to participate -- even if it expected to ultimately lose. By owning 39 per cent of Sky, Fox can benefit if its participation drives up Comcast's bid in the auction. That would allow Fox to sell that minority stake to Comcast for more money. 

Under the auction rules, Fox, as the lowest bidder so far, can make the only bid in the first round. In the second round, Comcast can make a counterbid. If that doesn't determine a winner, then both parties can submit offers in the third and final round. The bids won't be made public until after the auction's completion Saturday evening.

Fox first proposed buying the 61 per cent of Sky that it doesn't already own in December 2016, for £10.75 a share. Mr Murdoch and his family are major shareholders in Fox and News Corp, which owns The Wall Street Journal.

After regulatory and political hurdles delayed approval, Comcast in February announced a surprise bid to buy all of Sky for £12.50 a share. Fox and Comcast traded bids again in July.

Amid all that, Comcast and Disney separately battled to buy a big chunk of Fox assets. Disney won in July, agreeing to buy those Fox assets, including its existing 39 per cent in Sky, for $71 billion.