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Sky auction brings fees bonanza for City advisers

Rupert Murdoch is seeking full control of sell Sky to sell it on to Disney - AP
Rupert Murdoch is seeking full control of sell Sky to sell it on to Disney - AP

More than half a billion pounds in fees for bankers, lawyers, accountants and public relations firms are at stake in the next 24 hours as Comcast takes on with 21st Century Fox and Disney in the final battle for Sky.

The bonanza ranks the dramatic  auction of the pay-TV giant among the most lucrative takeovers ever for City advisers.

According to offer documents already published by Comcast and Fox, which is backed in the auction by Disney, the two sides and Sky have agreed to pay a total of more than £580m between them, excluding VAT and other taxes.

Not all the fees will be paid, however. A proportion of the payouts to financial advisers, lawyers and public relations firms depends on who emerges as the new owner of Sky or on the discretion of the bidders.

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Comcast’s financial advisers, led by the boutique Robey Warshaw, are in line for for up to £38.7m if they secure a recommendation for their bid from Sky’s independent directors. Its lawyers, including the top City firm Freshfields, will get up to £24.1m, plus extra hourly charges. Success will also mean public relations firms, led by Tulchan, will be paid up to £7.7m.

Fox’s bankers, led by Deutsche Bank, are due up to £38.4m if it wins the auction. Its lawyers, including Freshfields' Magic Circle rival Allen & Overy, will get £20m. Brunswick, the public relations firm, is in line for most of an £8.1m fee if the Murdoch bid comes out on top.

Sky will pay the most for its financial advice. Morgan Stanley, PJT Partners and Barclays will share up to £61.5m, assuming one deal or another goes through. Lawyers including Herbert Smith Freehills will be paid up to £20m. Its public relations firm Finsbury will get a £5m payday at the end of a long relationship with Sky.

Much of the rest of the fees payable by Comcast and Fox are related to their financing arrangements with lenders and some will be due regardless of which side takes the prize.

The auction officially began at 5pm and is due to run until the same time tomorrow. Fox is due to make the first bid as Comcast existing offer of £14.75 was the best on the table. Comcast will then have a chance to respond before the two sides have the option of going head to head in a final round of blind bids.

Sky shares closed comfortably higher than Comcast’s existing bid at £15.85, valuing the company at more than £27bn.