09:57, July 20 103 0

2017-07-20 09:57:08
A&O asks Government to stop interference in Murdoch bid for Sky

Allen & Overy (A&O) has written on behalf of its client 21st Century Fox, calling on the UK Government to “dismiss flagrant political attempts to interfere” in its proposed acquisition of Sky.

The firm is a longstanding adviser to Rupert Murdoch-owned 21st Century Fox and was drafted in at the end of last year ahead of the company’s planned £18.5bn takeover of the FTSE 100 giant.

However, the deal was stalled last month as Culture Secretary Karen Bradley said she was minded to refer the matter to the Competition and Markets Authority (CMA). A final decision has not yet been made.

In a letter sent by A&O to the deputy director of the department for digital, culture, media and sport, the firm expressed 21st Century Fox’s fears that a decision would not be made on the matter before the Parliamentary recess.

Adding that its client would be the “most directly affected by the regulatory process”, A&O added that 21st Century Fox was concerned by calls made to Ofcom by politicians, including Ed Miliband and Vince Cable.

Miliband and Cable have urged the UK Government to refer the transaction to the CMA, claiming the Murdoch family already have too much influence in the market. It added the matter should be referred as a result of the broadcasting standards public interest consideration regulated by Ofcom.

However, 21st Century Fox has hit back through A&O and said it “trusts the Secretary of State will dismiss these flagrant political attempts to interfere in the regulatory process”.

It added that Cable, in particular, reportedly stated “I have declared war on Mr Murdoch” when he was in charge of ruling on News Corporation’s proposed acquisition of Sky in 2010. 21st Century Fox has said this “displayed one of the most egregious examples of bias in decision making in recent years.”

21st Century Fox currently owns 39.1 per cent of Sky. In the original deal to increase the company’s stake, A&O advised 21st Century Fox on the M&A, competition and regulatory aspects of the bid, led by partners Antonio Bavasso, David Broadley, Seth Jones and Simon Toms.

Skadden partner Howard Ellin advised the acquirer on the corporate aspect, while Simpson Thacher partner Patrick Ryan advised on financing.

Herbert Smith Freehills is understood to be advising the target, Sky, although the firm would not confirm its instruction.

Deutsche Bank, which is acting as lead financial adviser to 21st Century Fox, was advised by Ashurst. The firm’s team was led by partners Adrian Clark, Robert Ogilvy Watson and Tim Rennie.

A&O has been contacted for comment.