Sky PLC’s (LON:SKY) recent share price softness represents a “short-term investment opportunity”, according to analysts at City broker Liberum.
The UK broadcasting giant is currently the subject of an £11.7bn bid from Rupert Murdoch who is looking to acquire the 60% or so of the company the doesn’t already control.
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That offer, which is currently being probed by competition regulators, values each Sky share at £10.75 – well above the £9.20 level where the price currently sits, suggesting that investors aren’t convinced the deal will get the green light.
Reaon for optimism?
“Sky’s share price has fallen back…on concerns whether the bid is cleared by the Government and/or that the political environment in the UK has turned more hostile with the rising popularity of the Labour party, led by Jeremy Corbyn, which is hostile to Fox,” wrote Liberum’s Ian Whittaker in a note.
“We think the concerns are overdone and believe the deal will pass.”
Whittaker says that Labour would have to get into power in the first half of next year in order to pose a real threat to the merger; something which he doesn’t think is likely to happen.
He doesn’t expect media plurality or broadcasting standards – the two things the CMA is looking into – should be an issue for Sky.
Ofcom’s initial report suggested that the broadcasting standards wouldn’t be an issue if the takeover goes through, while Whittaker adds that media plurality is “unlikely to be a major factor” given that News Corp is now a separate entity from Fox so the UK newspapers are not housed under the same company.
Given his belief that the deal will go through, the analyst has upped his recommendation to ‘buy’ from ‘hold’, keeping his £10.60 price target in place.
Sky shares were up 0.77%, or 7p, to 920.1p on Thursday morning.