BSkyB shares came back under the spotlight yesterday after the French media company Vivendi Universal offloaded its remaining 13 per cent stake in the satellite broadcaster.
Almost £2bn worth of BSkyB stock, or 250.6 million shares, were placed with investors in the market yesterday at a price of 670p a share.
Despite the size of the placing, City sources said there had been "huge demand" for the shares and that the book had been five times covered. BSkyB closed up 4 per cent, at 710p.
Analysts welcomed the move because it had finally removed the uncertainty of such a large stock overhang on the BSkyB share price, but also because they predicted index funds would have to increase their weightings.
"It has come as a bit of surprise but, having said that, I think it's the best thing that's happened [to BSkyB] for a very long time," said one analyst who did not want to be named.
"It's quite remarkable to be able to put 13 per cent of the company on the market and have the whole lot go," the analyst said. "It removes all the uncertainty, guessing and waiting games and will now let people focus on the fundamentals of the business rather than the technical issues."
Vivendi's decision to sell, which came earlier than the market had expected, was made in an effort to boost its standing with the credit rating agencies, sources said.
While the French company had transferred its 400 million BSkyB shares to Deutsche Bank last October at a price of 629p each, Vivendi had retained the financial exposure to fluctuations in the BSkyB share price.
"They [Vivendi] wanted to improve their position from a credit rating agency perspective since they had retained the potential downside exposure under that deal [with Deutsche]," said one.
Vivendi, which sold 150 million of its 400 million shares in December, saw its long-term rating downgraded by Moody's earlier this month. Standard & Poor's also revised its outlook on the business to "negative" from "stable".
While both ratings agencies said yesterday that the sale of the 13 per cent stake was positive for Vivendi's credit standing, they said it would have no immediate impact on the rating and that further measures to cut debt were needed.
The sale, which was handled by both Deutsche Bank and Goldman Sachs, is likely to see Vivendi book a small profit once banking fees have been paid.
Vivendi had been ordered by the European Union to rid itself of its shareholding in BSkyB as a key condition of winning approval for its purchase of Seagram.Reuse content