The acquisition of pay-TV giant Sky (SKY) by 21st Century Fox could be affected by the result of the UK general election according to analysts at investment bank UBS.
The deal was first announced last December and reports from Ofcom and the Competition and Markets Authority (CMA), which had been due in mid-May, have already been delayed.
At 976p the stock trades at a more than 9% discount to the £10.75 offer price and the shares have fallen 2% in the last five days as the outcome of the election has become less certain.
‘Sky’s share price has fallen in recent days as opinion polls indicate a narrowing Conservative lead over Labour ahead of the general election on 8 June. We note a number of Labour MPs have indicated opposition to a proposed Fox/Sky deal, according to recent reports in Reuters,’ says UBS.
It adds: ‘Taking into account latest polling, we believe a narrow Conservative majority or hung parliament could increase the risks around deal approval, or increase the likelihood the deal is referred to the CMA for an in-depth review.’
Ofcom is due to give its opinion to the Secretary of State for Culture Media and Sport on 29 June, but the Secretary of State is not bound to follow the telecom regulator’s recommendation.
UBS is staying at ‘buy’ with a £13.10 price target for now.
