12 December 2016 by lberuti
On Friday, NWSA (21st Century Fox America, Inc) reached an agreement with the independent directors of BSY ( Sky Plc ) to acquire the 60.86% of BSY it does not own at a price of £10.75. It represented a 36% premium to the price of the shares prior to the announcement (making up for part of the shares year to year drop which amounted to 37%) and valued the company at roughly £18.5Bln. While the agreement does not guarantee an offer will be made, 21st Century Fox’s CEO said their current 39% stake is “not an end state which is natural for (them)”. BSY’s stock jumped 33% when the news hit the tape, but has given some ground since and now trades 10% below the offer level. Equity investors acknowledged that if a full investigation by the Competition and Markets Authority is unlikely as pay-TV competition would not be significantly altered, there could be a regulatory review centering on media plurality and whether the deal would confer too much influence over public opinion to the Murdoch family. Credit investors took a more sanguine view, and the 5-year CDS of BSY which tightened by 20bps on Friday is still trading at the tights of the year.
Meanwhile, the broader credit market enjoyed another positive session particularly in Europe, where iTraxx Financial Senior and Subordinated (3.5bps and 9bps tighter at 94.5bps and 216.5bps respectively) once again led the charge tighter.