westmoreland wrote:Arborbridge wrote:Another US predator. Shame!!
it's already 39% owned by fox isn't it?
Yes.
westmoreland wrote:couldn't they conceivably block a deal? ...
Depends what you mean by "block a deal".
As Sky's share capital stands, Fox can easily block Comcast from taking over Sky by a scheme of arrangement, from delisting Sky or from doing anything else that requires a special resolution to be approved by shareholders, simply by voting against such resolutions.
Fox can also easily block Comcast from taking over Sky
fully by a traditional takeover offer, simply by refusing to accept any such offer. In particular, such a takeover offer has to be made for all the shares that Comcast don't already own, which certainly include Fox's ~39%, and Comcast have to get acceptances of such an offer from 90% of the shares it is made for to be able to compulsorily purchase the rest. So any shareholder with over 10% of the shares can block a traditional takeover offer from going through to the compulsory purchase stage, which for a company with a big shareholder base is in practice the only way for the offeror to end up with literally
all the shares from a traditional takeover offer and thus take over fully.
Fox cannot use their ~39% shareholding to block Comcast from getting everyday operational control of Sky by a traditional takeover offer - for that, Comcast only need to get more than half of Sky's shares, enough to pass ordinary shareholder resolutions. They can certainly make it more difficult for Comcast to do so by refusing to accept any such offer - if e.g. Comcast start off not owning any Sky shares, they end up have to persuade the holders of ~50/61sts = ~82% of the other shares to accept any offer they make to get everyday operational control, rather than the 50% of the holders of the other shares they would have to persuade if Fox didn't own any shares and so all of the shares were "other shares". But only make it more difficult, not block.
So essentially, Comcast can get everyday operational control of Sky with the offer they've announced they're seriously considering making, but cannot either push it through to a full takeover or achieve a full takeover by the alternative scheme-of-arrangement route against Fox's opposition. This is stuff that Comcast must be aware of, so if they go ahead and actually make the offer they're considering, they will presumably be willing to settle for just everyday operational control, hoping to persuade Fox to accept, or both.
Or just conceivably, willing and able to get everyday operational control and later use it as a base from which to achieve a full takeover. I've seen this done once, when Tesco took over Dobbies Garden Centres about 10 years ago. What happened then was that Tesco made a takeover offer, and a fairly major minority shareholder who didn't want their shares taken over bought their holding up to over 25% of the shares (by paying a bit more than the takeover price on the market), blocking Tesco from getting more than everyday operational control. Tesco apparently settled for that, but very roughly a year later, the Dobbies board (which of course was basically appointed by Tesco as the majority shareholder) announced plans to expand Dobbies' business and a rights issue to fund that expansion, and Tesco announced another takeover offer for what they hadn't got of Dobbies first time around. The rights issue was big enough that if Tesco took up their rights and the minority shareholder didn't, Tesco would have over 75% of the shares and would be able to force a scheme-of-arrangement takeover through. And Tesco clearly had the financial resources to take up their rights, while the minority shareholder probably didn't have the financial resources to take up theirs (or alternatively, they did, but could see the writing on the wall: there was nothing to prevent Tesco repeating the manoeuvre in another year's time, and again and again after that if needed...). Anyway, the minority shareholder issued a legal challenge to the rights issue, which I think was essentially about whether the Dobbies board could legally have the rights issue without a special shareholder resolution. They lost the challenge, and at that point they gave in and accepted the new takeover offer from Tesco - which incidentally was for a somewhat lower takeover price than the original takeover offer and less than what the minority shareholder paid for the extra shares they bought to take them over 25%. And the new takeover offer went through fully after that.
The point of all that is that the "As Sky's share capital stands" near the start of this reply is an important qualification to the conclusion that Comcast cannot force their takeover through fully: if they can get everyday operational control of Sky, they might be able to change how Sky's share capital stands. This applies especially when the offeror has much greater financial resources than the blocking minority shareholder, as in the Tesco/Dobbies case. I very much doubt it is in this Comcast/Fox/Sky case, but it is conceivable...
Probably more to the point, the blocking minority shareholder in such cases needs to take care that it never becomes the case - if e.g. Fox were to become financially stretched at some point in the future, that would be the time for Comcast to pounce. That makes continuing to be a blocking minority shareholder after Comcast takes everyday operational control (assuming they do) quite a constraint on Fox's freedom of action about their other activities. As a result, if Comcast actually make their bid, I think it much more likely that Fox will either raise their bid to be higher than Comcast's or give in and accept Comcast's than that they'll simply settle for being a blocking 39% minority shareholder. But they certainly could choose to settle for that.
westmoreland wrote:... they only need to persuade 11% i think? only at 90% approval can COMCAST compulsorily buy the remainder, as far as i know.
I'm not quite certain what you're talking about Fox persuading other shareholders to do there.
What I
think you mean is persuading enough of the other shareholders not to accept an offer from Comcast to prevent Comcast pushing a traditional takeover offer through fully with compulsory purchases, 11% of the shares not accepting being enough to prevent that. (That makes the second sentence in the quote connected with the question, which is why I think it's what you mean.) If so, the answer is basically no: Fox don't need to persuade
anyone else not to accept an offer from Comcast to do that, because they merely have to not accept themselves to ensure that a great deal more than 11% don't accept.
But it could be that you mean the question to be about persuading enough of the other shareholders to accept Fox's own offer to ensure that Comcast cannot succeed at all with their offer, with the second sentence being an independent observation. If so, yes, persuading the holders of 11% or more of the Sky shares to accept Fox's own offer, added to the 39% Fox already own, would be enough to give Fox more than 50% (once they were able to declare their offer fully unconditional, that is). That would give Fox everyday operational control of Sky and would prevent Comcast from being able to acquire even a single share by a takeover offer. But in the presence of a higher offer from Comcast (which we don't yet have) or a plausible-looking possibility of such an offer emerging (which we do), it is of course very difficult for Fox to persuade other shareholders to accept Fox's own offer by any means other than raising it above Comcast's offer, which they'd certainly prefer not to do and might be totally unwilling to do...
Gengulphus
