Credit Suisse still likes Sky PLC (LON:SKY) but with the shares having risen following 21st Century Fox's bid, it has downgraded the stock to 'neutral'.
The shares are currently trading at 986.5p, having been languishing at around 790p before Sky's major shareholder Fox, guided by median titan Rupert Murdoch, launched an agreed bid worth 1,075p a share.
Reflecting Fox's move, Credit Suisse has raised its target price from 980p to 1,075p.
The proposed transaction will need EU merger clearance, the Swiss bank notes.
“This could theoretically go to Phase 1 or Phase 2 but in our view it is likely to gain merger clearance without major conditions given the lack of overlap in Europe between the two companies. There could also be a referral to Ofcom under the Enterprise Act 2002 by the Secretary of State for Culture, Karen Bradley, to look at issues regarding media plurality. Such a referral, is by no means a certainty but a decision not to refer is potentially subject to judicial review,” the broker suggested.
According to the Guardian newspaper, there is also the possibility that the broadcasting watchdog could investigate whether Murdoch, who claimed to be unaware of the phone-hacking and other crimes at The News of the World when his company owned it, is a 'fit and proper' owner of one of Britain's major news outlets.