Murdoch swoops on Sky

Rupert Murdoch's News Corp wants the rest of Sky but should shareholders hold out for a better deal? Ben Judge reports

Last Friday, Rupert Murdoch's 21st Century Fox made a surprise bid for the 61% of UK satellite broadcaster Sky it doesn't yet own. Fox offered £10.75 a share, a 36% premium on the closing price the day before the offer.

This isn't the first time Murdoch has tried to gain full control of Sky. His 2011 News Corporation bid was abandoned in the midst of his newspapers' phone-hacking scandal. Murdoch's bid should be fiercely resisted, says Alex Brummer in the Daily Mail. It is hard to conclude that Fox is "is any more acceptable as a buyer than old News Corp before". The leadership is "to all intents and purposes" the same, "with Rupert Murdoch and the family votes and shareholdings all but identical". There must be "concern" that under Fox "Sky News will be politicised in the manner of the rabidly right-wing Fox News in the US". The government should "lose no time and seek an Ofcom review".

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

But why would Murdoch move now? Sky has always been in his sights, says Nils Prately in The Guardian; he was only biding his time. Furthermore, the fall in the pound makes it cheap. And finally, competition from BT, Amazon and Netflix has depressed the share price and "created an opening to put a cash offer on the table that is generous by City yardsticks". That sort of bid "tends to succeed", says Pratley, "especially when there are no other bidders in town".

Murdoch has been playing the "long game", agrees Lex in the FT, and with the "fury over tabloid misconduct" no longer a hot issue, the going should be easier. And Fox has another "compelling reason" to buy. Scooping up Sky would make it "easier to share content across the US and the UK, and in Germany and Italy, where Sky has bought out minorities of its own".

Sky's independent directors, whose job is to "protect non-Murdoch shareholders' interests", have shirked their responsibility, says Chris Hughes on Bloomberg: the board has accepted the bid. But some independent shareholders are up in arms as they think it's too low. Standard Life, Royal London and Jupiter Asset Management have all "spoken out", with others behind them who "haven't put their head above the parapet". And they are all "on the right side of the argument". Sky may be in the doldrums for now, but "it has a track record of making investments pay".

What's more, says Pratley, the independent directors have offered "no real explanation" of why they feel the bid is acceptable. The process seems "rushed and lacking in transparency", and shareholders should hold out for a better offer.

Bids & deals: Japan goes scrumping

Irish banana giant Fyffes has received a takeover offer from Japan's Sumitomo Corporation of €2.23 a share, a 49% premium to the prevailing price, valuing Fyffes at €751m (£633m). It has the unanimous approval of the board, but has yet to be approved by shareholders.

Nevertheless, "investors are likely to jump at the opportunity to cash out", says Julia Bradshaw in The Times. Shareholders were left "disappointed" in 2014 after a "lucrative" £622m merger with American rival Chiquita collapsed.

Fyffes is the oldest fruit brand in the world, established in London in 1888 and bought by Fruit importers of Ireland in 1986. Now it employs 17,000 people and last year turned over more than €1.2bn, distributing 46 million cases of bananas throughout Europe. It has been investing in production assets and is not merely an importer, but a grower too. The Sumitomo Corporation, a huge conglomerate, is Asia's biggest fruit distributor. Around 27% of shareholders have already approved Sumitomo's offer, says Bradshaw, including the McCann family, the company's second-biggest shareholder. The merger is described by David McCann, Fyffes' chairman, as a "compelling proposition". The McCanns will receive almost €87.5m if the deal goes through, with the Zucker family of South Carolina, the company's biggest shareholder, in line for a similar amount.

City talk

Michelin-starred celebrity chef Michel Roux Jr apologised this week for paying his staff below the minimum wage. Staff at his Le Gavroche restaurant in Mayfair, which is booked up three months in advance, were being paid an effective rate of £5.50 an hour and working 68-hour weeks, The Guardian discovered in November. "The buck stops with me and I take responsibility for ballsing up," he said in an interview with The Caterer. "I am embarrassed and I am sorry." He said the underpayment was an oversight, before adding, humbly, that "the benefits of working at Le Gavroche and for the Roux family are incredible You can't put a worth on it. You can't put it on the payslip."

Flooring retailer Carpetright is often seen as a bellwether for the health of the housing market. But its latest misfortunes are due to stiff competition from upstart Tapi rather than a shaky property sector, says Clare Hutchison in the Evening Standard. Carpetright's like-for-like sales fell by 2.9% in the six months to 29 October; total sales dipped by 3.8% and pre-tax profits slumped by 44% to £5m. Tapi was set up last year by Martin Harris, the son of Carpetright founder and boss Lord Harris, who stepped down in 2014.

The book is open on the race to become the new boss of Marks & Spencer after chairman Robert Swannell steps down in January, says Hugo Duncan in the Daily Mail. Swannell, in the job since 2011, helped stave off a £9.4bn bid from Philip Green in 2004, but his reign has been overshadowed by the "dismal performance" of the group's clothing arm. The frontrunner at 3/1, according to Ladbrokes, is the chairman of John Lewis, Sir Charlie Mayfield. Debenhams chairman Sir Ian Cheshire is second favourite at 5/1, with Stacey Cartwright, CEO of Harvey Nichols, at 6/1. If you fancy a long shot, Philip Green is currently at 100/1.