James Murdoch dismisses regulatory fears over Fox’s £11.7bn bid for Sky

Rupert Murdoch’s 21st Century Fox has made a formal bid for full control of Sky, setting up a showdown with smaller shareholders and a battle with UK and European regulators.

The £10.75 a share all-cash offer for the 61 per cent of Sky that the US media group does not already own values the UK-based group at £18.5bn, and will cost Fox £11.7bn. The offer comes almost a week after the European pay-TV broadcaster announced it had agreed a proposed deal with Fox.

James Murdoch, Sky’s chairman who is also chief executive of Fox, said he was confident the deal would pass “regulatory muster” and would be completed before the end of 2017.

“We will be engaging with the relevant agencies and authorities,” Mr Murdoch told an investor call, adding that he was sure “no meaningful concessions will need to be made”.

The UK government is unlikely to decide whether to refer the Fox take-over to Ofcom, the media regulator, before the new year. The deal is also expected to require clearance from the European Commission following Sky’s acquisition of Fox’s Italian and German TV businesses in 2014.

Fox’s offer, which remains the same as the price agreed last week, values Sky at a 36 per cent premium to its closing share price on December 8, the day before news of the approach was announced. However, some smaller shareholders such as Standard Life, Jupiter Asset Management and Royal London have spoken out against the offer arguing that it undervalues Sky: its shares were trading at the offer price back in February.

The Murdochs abandoned their last bid for Sky in 2011 amid the outcry over the phone-hacking scandal. Since then, their group has separated into two companies: Fox, which consists of a film studio and television assets, and News Corp, which owns newspapers.

Abandoning the bid in 2011 cost News Corp a break fee of £38.5m; this time Fox will pay Sky £200m if it walks away from the deal. Fox said the combined company would help create a “consumer powerhouse reaching 100m households”.

“This deal will enable us to be a leader for the next wave of content consumption growth,” James Murdoch added.