(Repeats Dec. 15 story without changes to text)
* Fox and Sky agree deal in just over one week
* Talks held across London to hammer out price
By Kate Holton and Sophie Sassard
LONDON, Dec 15 British business veteran Martin
Gilbert was at his desk in early December when he received the
call he had been expecting for years. James Murdoch wanted to
Days later, Gilbert, the deputy chairman of Sky,
was in the New York offices of Twenty-First Century Fox
meeting James, brother Lachlan, father Rupert and the U.S.
firm's finance director John Nallen.
The topic was Fox's 39 percent holding in Sky.
Five years after a phone hacking scandal at one of Murdoch's
tabloid newspapers derailed a previous bid to take full control
of the European pay-TV firm, the family decided the time was
right to try again, convinced that a deal would enable them to
better take on the likes of Netflix.
"We had been on bid alert due to the fall in the pound and
we'd been preparing for this for months, or even years, ever
since the last bid failed," a person familiar with the situation
said, in reference to the fall in sterling following the British
vote to leave the EU.
"We knew they needed to be prepared."
With James Murdoch both the chairman of Sky and the CEO of
Fox, it fell to Gilbert to push for the best deal for Sky's
independent shareholders. According to the source, Gilbert was
told that Fox had three options.
They could sell their stake, and potentially attract a rival
takeover, they could manoeuvre to buy the rest of the firm at a
low-ball offer or they could negotiate on price in return for
With Gilbert agreeing to talks, the focus moved to London
where both sides engaged in a frantic round of meetings to
haggle over the price the Murdochs needed to pay to unite their
empire across two continents.
In meetings near the fashionable King's Road, at Sky's
offices and in the premises of their advisers and lawyers, Fox
agreed to increase its offer three times before both sides
settled on the 10.75 pounds per share offer.
As the talks ran into the weekend the normal Sunday British
roast dinner was skipped in favour a simple lunch and afternoon
tea. Sunday was spent at the offices of Sky's advisers PJT
Partners while the teams moved to the premises of lawyers
Herbert Smith for the final 24 hours before the deal was sealed.
Fox, a second source said, knew they had to get the price
right as a leak just two days after the New York meeting alarmed
some Sky shareholders who said the firm was being sold off too
Those familiar with the talks said the atmosphere was
completely different to five years ago, when the phone hacking
revelations exploded into one of the biggest media scandals to
hit Britain, damaging the Murdochs' reputation.
"Martin made a decision which I completely agree with which
was to go quick and friendly," the second person close to the
talks said, on the condition of anonymity.
"This was the best way to drive the price up as opposed to a
big public fight which would have made it likely to end up with
no deal at all given the sensitivity of the situation."
A range of code names were used during the talks, including
on one document Red Fox and Blue Sky.
The two sides said on Thursday they had agreed a deal
valuing Sky at 18.5 billion pounds, with Gilbert recommending
the offer to shareholders. While some well-known London
investors have denounced the bid as too low, several in the top
50 said they would be pragmatic and accept it.
"We did the best we could," the first source said. "We got
the best we could out of Fox."
(Editing by Adrian Croft)