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Comcast makes £22B takeover bid for Sky, challenging Murdoch's Fox offer

Comcast Corp. has made a takeover bid of £12.50 per share for Sky plc, valuing the British pay TV giant at about £22 billion, directly challenging the offer of £10.75 per Sky share by 21st Century Fox Inc.

Comcast's proposed terms represent a premium of about 16% compared to Fox's offer of about £11.7 billion for the nearly 61% of Sky that Fox does not already own.

Brian Roberts, chairman and CEO of Comcast, said the company intends to use Sky as a platform for growth in Europe.

He said: "Adding Sky to the Comcast family of businesses will increase our international revenues from 9% to 25% of company revenues."

Comcast's bid follows recent reports that Fox is under increased pressure to improve its December 2016 offer for Sky after the latter secured a range of Premier League rights packages under a three-year contract for £1.19 billion per year.

Fox's offer to seize full control of Sky is also facing increasing regulatory scrutiny in Britain.

So far, only EU antitrust regulators and Ireland have approved the proposed takeover; British antitrust regulator the Competition and Markets Authority provisionally ruled in January that the Fox/Sky deal would not be "in the public interest" on media plurality grounds, as a takeover by Fox would place Sky News, The Times and The Sun all in the hands of the Murdoch Family Trust.

The watchdog proposed remedies that include spinning off or divesting Sky News, blocking the deal entirely or behavioral solutions such as appointing independent directors.

Sky CEO Jeremy Darroch said Sky News is not a "critical" part of the company's business. However, Fox improved its offer to Sky by extending its commitment to fund Sky News (UK) to at least 10 years, an improvement on Fox's earlier offer of "firewall remedies" at Sky News.

£200M termination fee

Under a cooperation agreement between the companies, Fox will have to pay a deal termination fee of £200 million if the company fails to obtain regulatory approvals before the longstop date.

The main reason that the Fox takeover faces such political and regulatory pressure in the U.K. is public outrage over a phone-hacking scandal that involved Murdoch's now-defunct News of the World tabloid, which derailed a prior bid in 2011.

Murdoch's first attempt to take over the pay TV giant would have combined 40% of the newspaper market in the U.K. and around 35% of the TV market, Claire Enders, of London-based research firm Enders Analysis said in an earlier interview with S&P Global Market Intelligence.

Fox and News Corp. have since split into separately traded companies, making a deal more likely to go through, according to industry observers.

Comcast previously launched an offer to acquire Fox, but has lost to Walt Disney Co., which offered to acquire Fox's international and domestic assets for about $52.4 billion in December 2017. Prior to the announcement of intent to acquire Sky, the U.S. cable company was reportedly considering reviving its bid for Fox.

If Sky does move ahead with the Fox deal, Disney will assume full control of Fox's shares.

Sky refused to comment when approached by S&P Global Market Intelligence.

Sky's share price surged by 18.4% at the start of trading Feb. 27, rising to £13.10, up from £11.05 at the close of Feb. 26 trading.