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Trading in broadcaster Sky is unusually quiet, but it is the calm before the storm later Friday and Saturday. Sky shares were holding steady today at £15.80 with the market confidently expecting to see that price matched or beaten as the result of an auction for the company to be held over the next 24 hours.

The company currently stands at the centre of a ferocious bidding war between Rupert Murdoch’s 21st Century Fox and US telecommunications conglomerate Comcast. Sky is due to be sold off in an auction which will start at 5pm Friday and end Saturday evening. Britain’s takeover panel took the unusual decision to organise the auction and said that all parties have agreed to the process, which will have three rounds.

The battle to take over Sky started with a £18.5 billion by Fox in December 2016 but after several bids and counter bids it escalated to £26 billion in July this year. Neither Fox nor Comcast have been prepared to say that this is their final bid so the auction will force them to show their hand in real time and say how much Sky is worth for them.

“The appeal of Sky is that the company managed to reliably post high revenue and profit increases – net profit up 7.6% on latest count – and has been surprisingly resilient in an era where on demand television is growing rapidly with Netflix and Amazon’s Prime taking away market share for most broadcasters,” explains Fiona Cincotta, financial market analyst with City Index.  “It has also lost fewer viewers than other broadcasters and has managed to keep customer numbers steady. But the takeover of the company has been complicated by various regulatory issues and concerns over how much influence Rupert Murdoch will eventually have over the media in the UK.”

The bidding war this year has pushed up prices by about 60% since the beginning of the year and that after years of just rumbling between 650 and 900 they have spiked to their current price.

The Sky shares auction process will involve three rounds of bidding, with the third round scheduled to accept best and final offers. Comcast was in the lead with an off of £14.74 per share, although Sky shares have been trading well above Comcast’s higher offer. This is because investors believe that the bidding war will see shares trading higher.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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