One London cabbie has just earned the right to bore passengers as follows: “I had this American geezer in the back of the cab. Took him to the shops to have a look at getting Sky. Told him how good it is for the football. Stone me if he hasn’t offered £22bn for the whole company!”

Bullish taxi drivers are a top-of-the-market phenomena. Comcast’s attempt to trump 21st Century Fox’s bid for the UK media company is on the high side at £12.50 per share in cash. The question is whether Fox — or Disney, which is buying most of that Murdoch-controlled US group — will go higher. A Sky share price of £13 shows the market thinks so.

Happy days. Nothing suits stock market investors better than a testosterone-fuelled bid battle for an asset they are weary of. Sky is a good broadcaster and broadband group but too small to thrive independently. Fox’s 2016 bid at a 40 per cent premium for the 61 per cent it does not own looked generous because shares were weak.

Fox surely hoped its long-held two-fifths stake in Sky would forestall competing bids. Brian Roberts, boss of Comcast and an atypically attentive taxi passenger, is calling that bluff. His own assumption must be that Fox or Disney would sell the stake if Comcast secures more than 50 per cent of Sky. Shared ownership of Sky would be fraught, particularly if it remained listed.

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Comcast and Disney are scrambling for content as media and telecoms consolidate. Disney’s agreed $66bn bid for the bulk of Fox is not dependent on inheriting the whole of Sky, though the Mouse would prefer it. Cord-cutting by US consumers makes Comcast, already owner of NBCUniversal, particularly needy. Challenged by structural changes at home, it is weak abroad. Owning Sky would take its foreign revenues from 9 per cent to 25 per cent of the total.

The bid approach for Sky from the US cable giant is 16 per cent higher than the Fox offer. An enterprise value for Sky of almost £30bn, according to S&P Global data, is close to 13 times earnings before standard deductions. But Comcast’s net debt should still be below three times earnings.


The scenario planning required of bidders and target would defeat even a cabbie skilled in plotting routes across gridlocked London. The outlook for Sky’s independent shareholders is plain. As a taxi driver might put it, they will all be minted.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Sign up at ft.com/newsletters.

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