Fox Plans Higher Bid for Sky Ahead of U.K. Approval

[John]

The offer documents from Comcast have just arrived in the post

[absolutezero]

I got them too.
Question is to fill them in or ignore them.

If a bid higher than Comcast's £14.75 comes in then I assume the forms get ignored.
I can't see Murdoch not wanting it and suspect he'll pay over the odds if he has to.

The rainforest that came through the door has several chunks along the lines of "If the offer does not become or is not declared unconditional then... the Form of Acceptance will be returned by post"

Or at least I assume I'm not bound by the £14.75 offer.
If a higher offer comes in and I've sent this off, have I shot myself in the foot?

[Gengulphus]

I got them too.
Question is to fill them in or ignore them.

If a bid higher than Comcast's £14.75 comes in then I assume the forms get ignored.
I can't see Murdoch not wanting it and suspect he'll pay over the odds if he has to.

The rainforest that came through the door has several chunks along the lines of "If the offer does not become or is not declared unconditional then... the Form of Acceptance will be returned by post"

Or at least I assume I'm not bound by the £14.75 offer.
If a higher offer comes in and I've sent this off, have I shot myself in the foot?

Take a look at page 51 on the Comcast £14.75 offer document, where there is a section that starts:

"3. Rights of withdrawal

(a) Except as provided by this paragraph 3 of Part C or as may otherwise be agreed in writing between Comcast Bidco and any particular Sky Shareholder in accordance with the Code, acceptances of and elections by Sky Shareholders under the Offer shall be irrevocable."

followed by subsections (b)-(i) over next page and a half or so about when one may withdraw one's acceptance and the exact procedure for doing so - which I won't even attempt to analyse: that's a job for actual shareholders... Then reconsider your assumption!

In any case, what's the hurry? Page 8 says that the first closing date for the offer is August 22nd - more than a month away. And in the case of an offer being successful, the Takeover Code says that you must get a further period (of at least 14 days IIRC) to accept, and in practice, the offer normally proceeds to the compulsory purchase stage and remains open for acceptance until the acquirer has to determine exactly which shares they are compulsorily purchasing. So I'd suggest putting the documents somewhere safe and setting a calendar reminder for say a month from now. By then, Fox will probably either have announced an increased offer or announced that they're not going to come up with one: either way, the decision will be clearer!

I should say that if you were to accept now and then Fox were to come up with a higher offer, you would probably eventually be released from the contractual obligation to sell to Comcast created by their offer and your acceptance, as the "acceptance condition" of the offer would never be satisfied and the offer would eventually lapse or be withdrawn. But your acceptance would make accepting Fox's higher offer impossible until you were released from it, so it would create some hassle. And in a nightmare scenario, if too many shareholders accepted Comcast's offer, they might go over 50% acceptances just as Fox announced the higher offer - and would want to hang on to those acceptances until Fox's offer lapsed through not satisfying its acceptance condition, or more likely was withdrawn as having no hope of doing so...

Gengulphus

[John]

I just ignored the Laird PLC offer documents and a cheque arrived in the post a couple of days ago.

Unfortunately I did the same with Old Mutual and apparently I now own shares in an outfit called Quilter.

Enough with the corporate activity already! I can't keep up.

[pyad]

The HYP rule is to do nothing voluntarily and let Market Trading do its stuff. That wins on balance over time. But there's always the rare exception which proves the rule.

In the case of bids, they create a mandatory disposal and so you have to consider whether you want the mandatory proceeds. For an all cash bid that's not a problem so nothing to consider.

In the case of an all paper or hybrid cash/paper offer you need to think whether you want that paper, bearing in mind that HYPs are all about income. If not, sell in the market.

I did this recently in HYP1, my quintessential no-tinker HYP, where Ladbrokes was taken over by a complex cash/paper offer. I looked at the deal and after a nanosecond decided that the bidder and its terms were undesirable for HYP purposes. So I sold Ladbrokes in the market and replaced the share with another that I found acceptable, Glaxo. As well as avoiding something I didn't want polluting the portfolio, this had the additional benefit of increasing the income compared with the former Ladbrokes holding.

HYP1 remains no-tinker but it's when there are mandatory events that you need occasionally to exercise a little judgement.

[absolutezero]

I got them too.
Question is to fill them in or ignore them.

If a bid higher than Comcast's £14.75 comes in then I assume the forms get ignored.
I can't see Murdoch not wanting it and suspect he'll pay over the odds if he has to.

The rainforest that came through the door has several chunks along the lines of "If the offer does not become or is not declared unconditional then... the Form of Acceptance will be returned by post"

Or at least I assume I'm not bound by the £14.75 offer.
If a higher offer comes in and I've sent this off, have I shot myself in the foot?

Take a look at page 51 on the Comcast £14.75 offer document, where there is a section that starts:

"3. Rights of withdrawal

(a) Except as provided by this paragraph 3 of Part C or as may otherwise be agreed in writing between Comcast Bidco and any particular Sky Shareholder in accordance with the Code, acceptances of and elections by Sky Shareholders under the Offer shall be irrevocable."

followed by subsections (b)-(i) over next page and a half or so about when one may withdraw one's acceptance and the exact procedure for doing so - which I won't even attempt to analyse: that's a job for actual shareholders... Then reconsider your assumption!

In any case, what's the hurry? Page 8 says that the first closing date for the offer is August 22nd - more than a month away. And in the case of an offer being successful, the Takeover Code says that you must get a further period (of at least 14 days IIRC) to accept, and in practice, the offer normally proceeds to the compulsory purchase stage and remains open for acceptance until the acquirer has to determine exactly which shares they are compulsorily purchasing. So I'd suggest putting the documents somewhere safe and setting a calendar reminder for say a month from now. By then, Fox will probably either have announced an increased offer or announced that they're not going to come up with one: either way, the decision will be clearer!

I should say that if you were to accept now and then Fox were to come up with a higher offer, you would probably eventually be released from the contractual obligation to sell to Comcast created by their offer and your acceptance, as the "acceptance condition" of the offer would never be satisfied and the offer would eventually lapse or be withdrawn. But your acceptance would make accepting Fox's higher offer impossible until you were released from it, so it would create some hassle. And in a nightmare scenario, if too many shareholders accepted Comcast's offer, they might go over 50% acceptances just as Fox announced the higher offer - and would want to hang on to those acceptances until Fox's offer lapsed through not satisfying its acceptance condition, or more likely was withdrawn as having no hope of doing so...

Gengulphus

Thanks, G

The document will enjoy a trip to the shredder.
Don't fancy being shot in the foot. I do suspect Fox will offer more.
Ignore and if anything happens then the shares will be compulsorily purchased anyway, as Pyad says.

A

[Gengulphus]

The document will enjoy a trip to the shredder.

No real point in using the shredder for the big document - there will be nothing personal or confidential in what it says, so it might as well just go into the ordinary recycling! And you might want to keep it until you know that it's no longer relevant - i.e. until this bidding battle is over, and maybe beyond that until you've dealt with the tax issues if any of your shares are unsheltered (which the fact that you got the document posted to you suggests that they are). Though that's only "might", because you can download a pdf copy from the Sky website - it depends on whether you like working from paper or from screens better. (Personally, I only keep paper copies of such documents until I've taken a pdf copy and have backed it up, as I immensely prefer pdf copies for the ability to search them for key words.)

The form of acceptance might be personalised - but I'd recommend delaying shredding it until it's definite that you don't need it.

Edit:

Ignore and if anything happens then the shares will be compulsorily purchased anyway, as Pyad says.

They almost certainly will, but it takes some months to get through the compulsory-purchase process, during which time you're not getting any return from your money. And if it's a certificated holding, they'll still hold up sending you the money until you've sent them the certificate (or a letter of indemnity if you've lost it). If it's a CREST or nominee holding, I doubt your broker will allow it to go beyond that stage - but I've never tested that!

And it is "almost certainly", not "certainly". Very occasionally, a takeover offer goes through (i.e. becomes fully unconditional) but the bidder never gets to the "90% of shares that the offer was for have accepted" stage and so cannot compulsorily purchase the rest. In that case, one is left as a minority shareholder in a company over 50% owned by a majority shareholder who can do most things with it without regard to one, or worse, over 75% owned by them and delisted, so one cannot even conveniently sell the shares.

Gengulphus

[absolutezero]

The document will enjoy a trip to the shredder.

No real point in using the shredder for the big document - there will be nothing personal or confidential in what it says, so it might as well just go into the ordinary recycling! And you might want to keep it until you know that it's no longer relevant - i.e. until this bidding battle is over, and maybe beyond that until you've dealt with the tax issues if any of your shares are unsheltered (which the fact that you got the document posted to you suggests that they are). Though that's only "might", because you can download a pdf copy from the Sky website - it depends on whether you like working from paper or from screens better. (Personally, I only keep paper copies of such documents until I've taken a pdf copy and have backed it up, as I immensely prefer pdf copies for the ability to search them for key words.)

The form of acceptance might be personalised - but I'd recommend delaying shredding it until it's definite that you don't need it.

Edit:

Ignore and if anything happens then the shares will be compulsorily purchased anyway, as Pyad says.

They almost certainly will, but it takes some months to get through the compulsory-purchase process, during which time you're not getting any return from your money. And if it's a certificated holding, they'll still hold up sending you the money until you've sent them the certificate (or a letter of indemnity if you've lost it). If it's a CREST or nominee holding, I doubt your broker will allow it to go beyond that stage - but I've never tested that!

And it is "almost certainly", not "certainly". Very occasionally, a takeover offer goes through (i.e. becomes fully unconditional) but the bidder never gets to the "90% of shares that the offer was for have accepted" stage and so cannot compulsorily purchase the rest. In that case, one is left as a minority shareholder in a company over 50% owned by a majority shareholder who can do most things with it without regard to one, or worse, over 75% owned by them and delisted, so one cannot even conveniently sell the shares.

Gengulphus

They're certificated but they're being posted off to go in the CREST account tomorrow morning.
I might just sell in the market if it looks like things are going to drag out/delisting looks like a possibility.
Currently 1535p so looks like 'the market' (i.e. people) think there will be an increased offer from somewhere.

[Gengulphus]

might just sell in the market if it looks like things are going to drag out/delisting looks like a possibility.

Just to reassure people: if delisting happens, stockmarket rules require plenty of notice to be given of a delisting (30 days is the figure that springs to mind, though I haven't checked it). I.e. one can wait for it to look like a certainty - if it merely looks like a possibility, it's still a long way off!

Gengulphus

[absolutezero]

might just sell in the market if it looks like things are going to drag out/delisting looks like a possibility.

Just to reassure people: if delisting happens, stockmarket rules require plenty of notice to be given of a delisting (30 days is the figure that springs to mind, though I haven't checked it). I.e. one can wait for it to look like a certainty - if it merely looks like a possibility, it's still a long way off!

Gengulphus

This is why I come here.
People like you are a font of knowledge.

[OLTB]

Afternoon all

I saw this RNS https://www.investegate.co.uk/article.a ... 611340769V regarding notification of a Hearing Date by The Takeover Panel on the 27th July 2018.

Does anyone know if this means Fox / Disney will settle on a final price for Sky at this hearing or is this just part of the normal company buyout process? Would Comcast have to do the same?

Thanks again, OLTB.

[OLTB]

They're like buses - this just in on Sky news https://news.sky.com/story/comcast-drop ... r-11441759 Comcast dropping 21CFox bid to concentrate on Sky alone.

Cheers, OLTB.

[Gengulphus]

I saw this RNS https://www.investegate.co.uk/article.a ... 611340769V regarding notification of a Hearing Date by The Takeover Panel on the 27th July 2018.

Does anyone know if this means Fox / Disney will settle on a final price for Sky at this hearing or is this just part of the normal company buyout process? Would Comcast have to do the same?

It seems to be all about the "chain principle", which is a rather obscure corner of the Takeover Code (*), which is about situations in which company A takes over company B, and both companies have holdings in company C. As a result, company A now has an increased holding in company C, which may give it control of company C or allow it to consolidate its control of company C. In such circumstances, the Takeover Panel rules on whether company A is obliged to make an offer for company C, with the general principles being that it is obliged to do so if either company C is significantly sized compared with company B, or getting/consolidating control of company C can reasonably be regarded as a significant purpose of company A taking over company B.

In this case, company A is Disney, company B is Fox and company C is Sky. The Takeover Panel ruled in April that if Disney actually took over Fox, Disney would be obliged to make an offer of £10.75 per Sky share, on the grounds that getting control of Sky might reasonably be considered a significant purpose of Disney taking over Fox. All three companies accepted that ruling.

Then Takeover Panel ruled this month that because Disney had increased its offer for Fox, the amount it would have to offer per Sky share if it actually took over Fox would rise to £14.00. Sky said it intended to ask for this ruling to be reviewed, and Disney and/or Fox might also have done so subsequently.

The RNS you've found simply says that the hearing to review the ruling will happen on July 27th. Since the only thing that has changed since the companies accepted the earlier ruling is the price of the offer Disney might be obliged to make for Sky, one or more of the companies presumably thinks it has been set too high or too low.

It does seem to be very much an obligation on Disney, as Fox has already made a £14.00 offer for Sky - as far as I can see, as the ruling stands it's basically just an obligation for Disney to 'take over' Fox's offer for Sky if it takes over Fox in other respects. And the only way I can see that it's likely to affect the outcome for Sky is if the review raises the obligation to make a £14.00 offer to something more than Comcast's £14.75 offer.

So to answer your questions: I can see the outcome of the hearing quite possibly affecting Fox / Disney's final offer for Sky, but actually settling what it is does not appear to be part of the hearing's purpose; no, it's not part of the normal takeover process (most don't involve a company both making an offer and having an offer made for them at the same time!); having dropped out of bidding for Fox, Comcast aren't in a similar situation (at least AFAIIA) and so shouldn't have anything similar applying to their bid for Sky.

(*) Well, at least as far as I am concerned - i.e. I've never come across it before!

Gengulphus

[John]

The dividend was suspended (or whatever they called it) after the initial offer, but did we catch up?

I am aware that we had a payment fairly recently. I'm a slob investor, but I do have far too many shareholdings.

Whenever I had a few grand in the last 25+ years, I bought some shares in whatever looked cheap; some were fine, some not.

IT savings plans were ok, but my best was probably in a Perpetual Invesco OEIC UK Smaller Cos: £1000 in 1991, 24K ish now, acc shares; I wish I'd chucked all of my spare change into it.

[Raptor]

The dividend was suspended (or whatever they called it) after the initial offer, but did we catch up?

I am aware that we had a payment fairly recently. I'm a slob investor, but I do have far too many shareholdings.

Whenever I had a few grand in the last 25+ years, I bought some shares in whatever looked cheap; some were fine, some not.

IT savings plans were ok, but my best was probably in a Perpetual Invesco OEIC UK Smaller Cos: £1000 in 1991, 24K ish now, acc shares; I wish I'd chucked all of my spare change into it.

Moderator Message:
please be aware this is hyp practical. The 2nd part of your oostdoes not fit into the guidelines. Please keep within the guidelines, thanks in advance. Raptor

[Bouleversee]

ii have just directed me to the corporate action notice on their website re the Comcast offer of £l4.75, requiring instructions by Aug.17. I shall ignore for the time being.

[absolutezero]

ii have just directed me to the corporate action notice on their website re the Comcast offer of £l4.75, requiring instructions by Aug.17. I shall ignore for the time being.

I ignored.
There was a debate about your instruction being irrevocable so if a higher bid came in you might be stuffed into accepting the £14.75

[Bouleversee]

Yes, thanks, I had read that.

Have just read an article (Reuters IIRC) which suggests that Fox will come back with a higher bid but I wouldn't bank on it.

[absolutezero]

Yes, thanks, I had read that.

Have just read an article (Reuters IIRC) which suggests that Fox will come back with a higher bid but I wouldn't bank on it.

I can't imagine Murdoch wanting to let Sky get away without a fight.

[Gengulphus]

I saw this RNS https://www.investegate.co.uk/article.a ... 611340769V regarding notification of a Hearing Date by The Takeover Panel on the 27th July 2018.
...

...Then Takeover Panel ruled this month that because Disney had increased its offer for Fox, the amount it would have to offer per Sky share if it actually took over Fox would rise to £14.00. Sky said it intended to ask for this ruling to be reviewed, and Disney and/or Fox might also have done so subsequently.

The RNS you've found simply says that the hearing to review the ruling will happen on July 27th. Since the only thing that has changed since the companies accepted the earlier ruling is the price of the offer Disney might be obliged to make for Sky, one or more of the companies presumably thinks it has been set too high or too low.

It does seem to be very much an obligation on Disney, as Fox has already made a £14.00 offer for Sky - as far as I can see, as the ruling stands it's basically just an obligation for Disney to 'take over' Fox's offer for Sky if it takes over Fox in other respects. And the only way I can see that it's likely to affect the outcome for Sky is if the review raises the obligation to make a £14.00 offer to something more than Comcast's £14.75 offer.

The review made no change to the Takeover Panel's ruling - see https://www.investegate.co.uk/takeover- ... 50338224W/. There's still a right of appeal, but no indication whether anyone is planning to use it.

Gengulphus