Sky shareholder acceptance threshold was overriding issue for independent board
Sky’s [LON:SKY] independent board was set on any takeover offer by 21st Century Fox [NASDAQ:FOXA] being conditional on the majority of Sky’s minority shareholders tendering in the event the deal is switched from a scheme to a takeover offer, a source close to the deal said.
The shareholder threshold, specifically for the switch, was the overriding outstanding condition for Sky’s independent board members in talks between the approach announcement on 9 December and the agreement today (15 December), the source said.
The announcement states that “under no circumstances can the Acquisition close without the approval of at least a majority of the Unaffiliated Sky Shareholders, unless the Independent Committee otherwise agrees”.
Other terms under discussion since the 9 December include break fee (set at GBP 200m according to today’s announcement), the source said.
The potential need for mitigating measures to achieve regulatory approval also featured in discussions, this source and a second close to the deal said. Fox has a very clear idea of what may be required to get the deal done, the sources said.
For this reason it is expected filing with the European Commission will not take as long as with BSkyB/News Corp [NASDAQ:NWSA] (2010), the sources said. In the previous deal, the parties filed with the EC around five months after announcing the transaction, which lapsed the following year due to political outcry.
The parties see the current political environment as more receptive to a transaction, the first source said.
Nevertheless, Fox is prepared to consider remedies if they are put forward by regulators, the sources said. It will not propose spinning-off Sky News in a filing with the EC, but will discuss the option if it is recommended by UK telecoms regulator Ofcom, the second source said.
Ofcom is expected to receive a DCMS (Department of Culture, Media and Sport) request to examine the implications of the deal for media plurality, as reported. In BSkyB/News Corp the telecoms regulator recommended Sky News be spun-off.
Sky did not respond to a request for comment. Fox could not immediately be reached for comment.