A report in the Financial Times suggests 21st Century Fox’s £18.5bn deal for pay-TV broadcaster Sky (SKY) could be derailed by a federal probe and lawsuits in the US.
On Friday competition authorities at the European Commission gave Fox’s acquisition of the 61% of Sky it does not already own the green light. But regulators in the UK are yet to rule. Ofcom and the Competition and Markets Authority are expected to report back by 16 May.
FIT AND PROPER TEST
Among the tests is whether Sky’s potential new owners are ‘fit and proper’ and Fox’s troubles across the Atlantic could have some bearing.
At 967p Sky trades at an 11% discount to the £10.75 offer price which suggests the market still has some concerns over the deal going through.
SHARES COULD SLIP TO 800p
Number crunchers at investment bank UBS reckon Sky could initially trade as low as 800p if the deal is blocked.
Analyst Polo Tang says: ‘We think it is possible for any regulatory issues to be overcome but should there be any issues on broadcasting standards, or the “fit and proper” test, potential undertakings/remedies could be for Fox to spin-off Sky News or for James Murdoch to step down from the Sky board.’
‘While Sky would be 100% owned by Fox should the deal go ahead, an independent Sky board could provide additional safeguards.’
