The U.K. Panel on Takeovers and Mergers, which has the power to decide the fates of bids for companies based within its borders, has decided to let the two competing bidders for satellite entertainment company Sky compete via an auction.
The two parties in the battle are Comcast Corp. (NASDAQ: CMCSA) and 21st Century Fox Inc. (NYSE: FOXA). The two have vied for control of Sky for several months.
The panel’s management wrote:
The auction procedure will consist of a maximum of three rounds which will all take place on 22 September 2018. In the first round, only the offeror with the lowest offer as at the commencement of the auction (or, in the event of both offers being at the same price, the last offeror to revise) may make an increased bid. In the second round, only the offeror that was not eligible to make a bid in the first round may make an increased bid (and it may do so even if no increased bid was made in the first round by the other offeror). If the auction procedure has not concluded after the second round (which it will if no increased bid is made in the second round), there will be a final round, in which both offerors may make an increased bid.
An offeror that is permitted to make a bid in any round may make a fixed price bid in cash in pounds sterling. No other form of consideration is permitted. In the final round, each offeror is additionally permitted to make its offer subject to the condition that the other offeror also makes a bid in the final round. Formula bids are not permitted in any round and there is no requirement that an increased bid must be higher by any minimum increment than the other offeror’s bid (although it must be higher than the last bid made by the offeror making the increased bid).
It is a strange end to a process that usually lets two companies bid against one another in the open market, and one in which the highest bidder takes the prize without government intervention.