Sky Deutschland Stock Rises on Talk That News Corp. Could Boost Stake

3:07 AM PST 11/21/2012 by George Szalai

The German pay TV giant's shares hit a 52-week high after a tax ruling makes it easier for Rupert Murdoch's company to raise its 49.9 percent holding.

LONDON - The stock of German pay TV giant Sky Deutschland hit a 52-week high on Wednesday after analysts suggested that a tax ruling could lead Rupert Murdoch's News Corp. to boost its stake in the company.

The stock went as high as $5.20 (€4.07), a 52-week high, in early trading. As of 11:30am Paris time, it was up more than 5 percent at $4.95 (€3.87). That gave the company a market value of $3.83 billion (€3 billion).

UBS analyst Polo Tang on Wednesday issued a research report on Sky Deutschland entitled "Tax ruling could fuel take-out hopes."

German authorities have approved a mechanism that would allow the company to preserve its $ billion (€2.3 billion) in tax losses in the event that News Corp. increases its ownership from 49.9 percent to above 50 percent.

"Through this, Sky Deutschland is expected to retain a "substantial" part of its €2.3 billion in losses," Tang said. "As a result, we would expect NWS to move to increase its stake in SKYD sooner rather than later before the operational gearing in Sky Deutschland becomes fully apparent."

Tang's conclusion for the stock: "Sky Deutschland shares should be supported by News Corp. buying in the market or from a potential bid."

A deal would be a fit for the entertainment conglomerate's recent strategic focus. News Corp. has been cleaning up its ownership stakes in various companies around the world, and president Chase Carey has signaled it could do more of that. Last year, the company looked to buy full control of U.K. pay TV giant BSkyB, but dropped the bid amid the phone hacking scandal.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai

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