And you thought kicking the can down the road was something they only did in continental Europe.
Wrong.
The UK government is also prepared to use to its size nine to boot – although in this country the can is kicked into the long grass not down the road.
From Reuters:
RTRS-UK GOVT ASKS REGULATOR IF NEWS CORP <NWSA.O> UNDERTAKINGS ON BSKYB <BSY.L> STILL CREDIBLE AFTER HACKING ALLEGATIONS-SOURCE
Meanwhile, the BBC understands Culture Secretary Jeremy Hunt is seeking advice on News Corp’s takeover bid for BSkyB.
It is thought he could now refer the deal to the Competition Commission.
BBC business editor Robert Peston said Mr Hunt was writing to Ofcom and the Office of Fair Trading for clarification following the latest revelations about the News of the World (NoW) and the decision to close the 168-year-old paper.
The FT:
Critically, his letter will ask if recent events revealing the extent of phone hacking at News Corp’s News of the World would make Ofcom and the OFT reconsider their advice that Rupert Murdoch’s group could be trusted to hold up their end of a bargain offered last January in order to avoid a lengthy referral of the bid to the Competition Commission.
A person familiar with the contents of the letter Mr Hunt is sending said that meant, in essence, it would ask whether revelations on phone hacking and the response by News Corp – including the decision to shut the News of the World – meant that the regulators could no longer say they believed the media group could be trusted to do what it promised.
In others words can Murdoch and News Corp be trusted to Sky News and not seek to influence its operations?
An interesting question and one that Hunt can ask someone else to answer – either the Competition Commission or the OFT.
Deft political footwork eh? And Hunt’s letter also steals the thunder of Labour leader Ed Miliband who was planning to force a Commons vote calling for the deal to be halted.
Back to the FT:
One regulatory lawyer told of the contents of Mr Hunt’s letter on Monday described it as “a well-crafted solution” to the political headache the government faced in granting further media power to Mr Murdoch in the immediate wake of the phone hacking scandal.
At pixel time, shares in BSkyb were 50p lower at 700.5p.
Update: 8.30am London time.
Ouch!
A bloodbath for the merger/arb community sure but perhaps a decent buying opportunity for others.
Whether the deal does or does not go ahead, Sky is still a formidable machine, that has a monopoly over Premier League football and is poised to start chucking off bucket loads of cash.
True, the undisturbed bid price of Sky was 600p, but add in the 20 per cent rise of the FTSE 100 over the past year, and the fact that the broadcaster’s earnings have outpaced the market (by 15 per cent) and a share price of 810p can be justified reckons Citigroup.
However, there’s probably still some more arb selling to come. Citi estimates the volume traded since Wednesday represents around one third of outstanding arb positions.
But the price could soon bottom.
*warning catches knives can be very bad for your wealth.
Related link:
Sky falls in — takes News Corp with it – FT Alphaville