Shares in Sky (LON:SKYB) have surged higher by more than 20% this morning as speculation that Comcast are considering a £22.1B takeover offer has raised the prospect of a bidding war with 21st Century Fox. The £22.1B all-cash offer represents £12.50 per Sky share, a 16% premium on the current bid from Fox which values the broadcaster at £18.5B. The stock has soared to its highest level since 2000 in response although the hefty premium that it currently trades above the proposed offer shows that the market is expecting higher bids in the future, with the share price surging above 1350 today.
Comcast (NASDAQ:CMCSA) look to outfox their rivals
The ownership situation is further complicated by the fact that Twenty-First Century Fox (NASDAQ:FOX) has agreed to sell its entertainment assets to Disney (NYSE:DIS), including its existing 39% stake in Sky for £37B. Should Comcast, the biggest cable operator in the US, outmanoeuvre Fox in acquiring the remaining 61% of Sky then there is an argument that the value of the assets that have already been agreed to be sold to Disney will lose some of their value.
Sky’s stock has enjoyed an impressive run higher since falling below 900 last November. There have been other positive developments for the broadcaster in recent weeks with the latest Premier League rights auction seeing Sky retain its grip as the clear market leader for showing football, in securing extra matches at a lower cost, but the biggest catalyst for the rise has been the takeover speculation.
Market recovery hinges on new Fed chair
Global stocks have extended their recovery from the pandemonium seen at the start of the month with several major indices now trading higher than they did on Monday the 5th February - the largest ever single day drop in the Dow Jones in point terms. That memorable day was also significant in that it ushered in a new era at the Fed, with Jerome Powell beginning in his role as the new chair of the US central bank.
Powell to deliver first policy speech
Whilst it was no more than a passing coincidence that the stock market drop was anything to do with Powell’s first day in office, today represents the first opportunity for him to outline his views on the economy and monetary policy since assuming the role. In the 3 weeks since that panicked plunge, stock indices have found a footing and recovered the declines almost in their entirety. The question now is whether the drop was simply a bump in the road, albeit a big one, to more record highs or a warning sign of what lies ahead.
The commonly accepted reason for the precipitous drop was that a higher than expected rise in wages from the NFP report had seen equity traders finally wake-up to the rising bond yields and realise the looming threat of inflation. The narrative itself is a little hard to believe given that subsequent CPI data beat forecasts and yet was met with little more than a shrug from the stock market, but any comments relating to inflation and/or yields today from Powell have the potential to move the markets.