Anyone owning shares in Sky (SKY) may be confused as to what’s going to happen to their investment given a twist to the media group’s takeover.

For the past year shareholders have been waiting for 21st Century Fox’s £10.75 per share takeover offer for Sky to complete.

Disney has now struck a deal to buy assets from Fox for $52.4bn including a 39% stake in Sky.

The Competition and Markets Authority (CMA) is due to give its verdict in March 2018 on whether Fox can buy the remaining 61% of Sky it doesn’t already own.

If that deal is approved then Fox will complete its acquisition and Sky shareholders will get the cash they’ve patiently expected. Fox would then transfer its full ownership of Sky to Disney.

Disney’s bid for Fox is seen in some quarters as improving the chances of the deal being approved given that it does not have the baggage associated with Rupert Murdoch’s Fox.

However, if the CMA blocks the deal, then Disney would only be left with the 39% of Sky it is initially inheriting from Fox.

UK takeover rules require someone owning more than 29.9% of a business to make a mandatory offer for the rest of the company. Disney has asked to be exempt from these rules, according to Financial Times.

The newspaper also reports hedge fund Polygon, which owns 1% of Sky, is lobbying the Takeover Panel to ensure the rule is enforced and argues Disney should be offering £13 per share in these circumstances.

There is also the possibility of a wider rebellion against the Fox bid from minority Sky shareholders as they look to squeeze more money out of Disney.

Away from the M&A activity, a recent channel-sharing deal with BT (BT.A) (15 Dec) could reduce some of the pressure Sky faces from sports rights inflation.

However, Shore Capital analyst Roddy Davidson thinks there are serious risks facing Sky if it is not taken over.

‘Specifically we believe that concerns over UK consumer weakness, growing competition, future pricing power, content cost inflation (including the imminent Premier League auction) and the potential erosion of its subscription base could result in a significant de-rating of its stock,’ he says. (TS)

‹ Previous2017-12-21Next ›