Sky share price subdued as Fox makes firm offer

UBS believes shareholders can push for bigger price

Sky share price subdued as Fox makes firm offer

Shares in Sky (LON:SKY) have retreated marginally as the 21st Century Fox Board and the Independent Committee of Sky announced that they had reached agreement on the terms of a recommended pre-conditional cash offer by 21st Century Fox for the fully diluted share capital of Sky which 21st Century Fox and its Affiliates do not already own. The offer values Sky at £10.75 per share.

UBS meanwhile remains bullish on the pay-TV group, arguing that shareholders could push for a higher offer price on strong second quarter results next month.

Sky’s share price meanwhile has slipped marginally lower in today’s session, having lost 0.15 percent to 982.00p as of 12:18 GMT. The shares are underperforming the broader London market, with the benchmark FTSE 100 index having climbed 0.17 percent higher to 6,960.76 points. The group’s shares have lost more than 11 percent of their value this year, as compared with a more than 11-percent rise in the Footsie.

Earlier today, UBS reiterated its ‘buy’ rating on Sky today, while hiking its price target on the shares from 1,310p to 1.370p, after Twenty-First Century Fox proposed to buy the 61 percent of the business that it does not already own. The move, however, has attracted backlash from some shareholders who have criticised the company for signalling it is willing to accept the £10.75-per-share bid without consulting investors.

The analysts believe that Sky shareholders could push for a higher offer price on strong second quarter results in January 2017 showing improvement in UK key performance indicators and satisfactory outcomes for the Champions League and Series A rights auctions.

“While the independent board of directors for Sky has agreed to the offer price of 1075p, the board can change its recommendation at any time up until the formal offer documents for the extraordinary general meeting are published, typically after regulatory approval for the deal is granted,” UBS analyst Polo Tang commented, as quoted by Sharecast.

The 20 analysts offering 12-month price targets for Sky for the Financial Times have a median target of 1,075.00p on the shares, with a high estimate of 1,400.00p and a low estimate of 400.00p. As of December 9, the consensus forecast amongst 19 polled investment analysts covering the stock has it that the company will outperform the market.

As of 12:34 GMT, Thursday, 15 December, Sky Plc share price is 982.00p.

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