FTSE In-depth: Sky bought by Murdoch?

By GEOFF FOSTER FOR MAILONLINE
Updated:

 

The picture suddenly looked a lot brighter for satellite TV giant BSkyB as its shares rocketed 28.5p to a two-year peak of 598.5p.

Financial Trading Screen

Sky share turnover swelled to five times above the average total

Excited punters switched on to early rumours that Rupert Murdoch, the 79-year-old media magnate whose News Corp empire already owns 39% of Sky, is planning to bid 735p a share for the outstanding 61%.

Turnover swelled to 21m-plus, some five times above the average total, as analysts fanned the takeover flames by saying it certainly would be a good time for Murdoch to pounce. BSkyB has invested well in recent years and ridden out the recession extremely well. Profit margins are now likely to increase from 2009 levels to around 20% over the next three years.

The onward march of high-definition television (HDTV) is driving growth at Sky and it is now only a whisker away from its target of 10m subscribers.

With the World Cup in South Africa looming in June, it must be confident of breaking the 10m barrier in the summer.

Murdoch would dearly love Sky's cash flow, but can News Corp afford it? Acquiring the balance at 735p a share would cost a hefty £7.6bn and net debt already stands at £5bn.

But Murdoch has pulled plenty of rabbits out of the hat over the years and should he do it again, it wouldn't surprise anyone, least of all one professional speculator who is rumoured to have bought 2.1m shares over the past few days.

Fund managers remained positive about the Footsie which rose 8.39 points to 5,625.65. Shrugging off prevailing fears of a possible Hung Parliament post May's election, they nibbled away at selected blue chips and were obviously pleased to see Wall Street advance 29 points at the opening. That followed a betterthan-expected 0.3% rise in US retail sales in February which helped allay fears over the world's largest economy.

Banks reflected the stellar performance overnight of their American counterparts after bipartisan Senate talks over financial regulation broke down. Hopes are now high that proposals made by President Obama will be watered down. Part nationalised Royal Bank of Scotland added 2.02p to 42.395p and Lloyds Banking Group 1.93p to Insurance giant Prudential put on 7p to 545p. Broker Oriel Securities suggested the terms of its giant rights issue required to help fund its £23.5bn purchase of AIG's Asian arm could be 6-for-1 at a substantially discounted 89p a share. After losing its prestigious place in the Footsie on Wednesday, Clive Cowdery's Resolution slipped 1.56p to 72.45p. South African bank Investec, flat at 530p, will take its place.

Revived industry gossip that Stuart Rose, executive chairman, will leave the retailing giant soon after Marc Bolland's arrival on May Day, accompanied a 4.4p gain to 358.5p in Marks & Spencer. Department store chain John Lewis's strong full-year results and bullish comments about trading prospects also helped sentiment.

Housebuilder Bovis Homes touched 415.5p and closed 12.8p better at 405.6p as rumour mongers suggested Persimmon (8p up at

445.1p) could be lining up an offer for the company. Earlier this week Persimmon rejected claims it was about to bid for Barratt Developments, 2.4p higher at 126.7p. How long before the up-market Berkeley (27p better at 800p) gets mentioned in the same breath?

A Killik buy recommendation lifted waste management group Augean to 33.5p before a close of 28.25p, up 2.25p. The broker is hopeful-that the company will gain approval from the Northants County Council for storage of low level radioactive waste. The award would be transformational and lead to a substantial re-rating of the business.

Globeop, the hedge fund services group, surged 17.75p to 291.5p after broker Execution Noble successfully placed 5m shares at 257p a share with various UK and European institutional investors.

Independent Media Distribution improved

2.5p to 55p following impressive annual results and confident remarks about future prospects. Revenues for the first two months of the year are 21% higher than last year. Cash in the bank at the year was £900,000.

Oil and gas explorer Ascent Resources firmed 0.25p to 5.63p after shareholders gave approval at the EGM for the profitable sale of Ascent's stake in Italian drilling rig firm, Perazzoli Drilling. Nautical Petroleum rose 3.5p to 51p after signing the Rig Agreement for the Catcher prospect, operated by Encore Oil, in Central North Sea block 28/9.

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