Sky recovers after fears of Labour victory

SKY shares yo-yoed as investors struggled to assess the risk a hung parliament poses to its planned £11.7bn takeover by 21st Century Fox.

The pay-tv giant’s shares opened down 3pc at 958p, their lowest level since the Murdoch family made their bid for full control before Christmas, as investors attempted to price the threats to the deal.

Fears that Labour could have a hand on power and erect political roadblocks to Fox’s plans subsided over the course of the day, however, and the shares recovered above 980p, down less than 1pc, by the close of trading.

Sky has been trading at a discount to the £10.75 per share offer price amid fears that regulators will delay or even block the takeover.

Ofcom is carrying out assessments of Fox’s record on broadcasting standards and the impact a merger could have on media plurality, and of the Murdoch family’s propriety.

Its crucial reports to the Culture Secretary, which could recommend a referral to the Competition and Markets Authority or remedies to protect the independence of Sky News, are due by June 20.

The Murdoch family’s earlier attempt to buy Sky collapsed in 2010 as their British newspapers were engulfed by the phone-hacking scandal. Fox currently owns 39pc of Sky.

Large chunks of Sky equity have been bought up by hedge funds that specialise in making quick profits by arbitraging the risks in mergers.

Analysts at RBC said they expected the deal to go through, assuming “a benign Ofcom report”.

Referral to the Competition and Markets Authority would knock the shares down to 915p, the analysts added.