Analyst: “Nothing tangible yet” on Fox/Sky

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January 12th sees Sky close its share register as far as the 10 pence special dividend is concerned for shareholders trading in Sky shares. This means that today (January 11th) is when Sky’s shares go ‘ex-dividend’ as far as shareholder pay-out is concerned for this past year’s trading.

This has prompted equity analysts at investment bank Exane/BNPP to examine the current state of play for Sky’s prospects. It headlines its note by saying that there is “Nothing tangible on the table yet after a year of effort” and reminding investors that it was more than a year ago (December 15th 2016) when Fox and Sky announced their agreement on the terms of a recommended ‘pre-conditional’ cash offer.

“The offer, which is intended to be affected by a scheme of arrangement, is subject to the satisfaction or waiver of certain pre-conditions, principally regulatory clearances.  Despite an initial validation by regulator OFCOM, the British Culture Secretary decided to refer the case to the Competition and Markets Authority (CMA), which has a statutory deadline of 6 March 2018 to submit its conclusions; its preliminary report is due in mid-January,” says the bank.

Currently the position is that Fox (on December 14th 2017) reiterated (because of the pending Disney acquisition) that ‘it remains fully committed to completing its current Sky offer’ and ‘it anticipates that, subject to the necessary regulatory consents, the transaction will close by 30 June 2018’.

The bank reminds investors that Disney’s stance may arguably fuel doubts over the success of the Sky offer. During the conference call on December 14th, Disney’s boss acknowledged that “one could argue that it might have a better chance of regulatory approval than Fox has had”. In addition, Disney’s intention to seek a waiver of the mandatory bid obligation may also reflect some anticipation that the offer could fail.

Not helping is the “rather unstable political situation in the UK,” says the bank’s note. That uncertainty is not helped by the fact that Disney has indicated that it could take up to 18 months to wrap the Fox deal, says the bank.


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