Walt Disney recently announced a takeover of 21st Century Fox, and a hedge fund with a small stake in Sky has taken issue with the transaction. According to their claim, minority shareholders in the UK-based broadcaster will be hit with a large fee as a result, unless the regulator steps in.
The Takeover Panel is currently reviewing Disney’s request to curb regulations that would require the company to bid for Sky if competition regulators move to block the offer from Fox.
According to the Financial Times, UK takeover Rule 9.1 of the Takeover Code dictates that a business which acquires over 30% of shares in a public company is required to make an offer for the remainder of the business. This is to protect minority shareholders’ interests.
If UK regulators approve the deal, Disney will acquire 100% of Sky as a result. If they don’t, the outcome is still unknown.
Polygon is a hedge fund with less than 1% of Sky. Co-founder Reade Griffith has been in touch with the Takeover Panel to argue on the minority shareholders’ behalf. According to Griffith, Sky investors would be offered a higher premium than the one Fox offered had Disney bought its shares directly, but that both companies have been intentionally avoiding an exact value thus far.
“The Fox and the Mouse have been more clever than that. They have included the Sky stake into a box full of other attractive Fox assets and tied it up with a bow and ribbon and told the Takeover Panel that Rule 9.1 does not apply and therefore no premium is warranted to minorities,” Griffith said.
The Financial Times stated that “The hedge fund’s intervention could be the first signs of a rebellion against the original Fox deal to push for a premium from Disney.”
The fate of Sky is still undetermined as the regulatory review continues.