Market Report: Takeover scenario helps BSkyB recover from fall

What could the future hold for BSkyB if News Corp is forced to sell down its stake? That was the poser being mulled over in the Square Mile yesterday following a step-up in pressure on the Murdochs' control of the satellite broadcaster.

After the news that the regulator, Ofcom, has upped its investigation into whether the group should hold a broadcasting licence in the wake of the hacking scandal, analysts were considering the possible scenario of News Corp – which was forced to shelve a £8.3bn takeover attempt last year – being ordered to get rid of its 39 per cent controlling stake.

UBS's Polo Tang was insistent that the prospect of such an event should not be seen as an "overhang". Instead, said the analyst, "any forced sale of such a strategic stake ... could potentially flush out a bidder for the whole company and therefore lead to hopes of a takeover".

Bank of America was considering the same scenario, with the broker saying that a complete exit may lead to speculation over whether either a US media company or a private equity firm could be interested in launching an approach.

Despite the chatter, the general consensus remained that a forced disposal of News Corp's entire stake was unlikely, while many were also sceptical about the possibility of it being instructed to reduce its holdings.

Nonetheless, the mention of potential takeover activity helped BSkyB to recover from an early fall, and it eventually closed 2.5p better off at 696.5p.

Overall, with non-farm payroll employment figures from the US managing to just about beat expectations, the FTSE 100 continued its recent recovery. A rise of 27.76 points to 5,887.49 meant the benchmark index finished the week less than 25 points lower than where it started, despite having shed 145 points over Monday and Tuesday.

The closely followed data helped many of the miners – including Vedanta Resources (up 28p to 1,421p) and BHP Billiton (up 35p to 2,023.5p) – to shrug off the decision by UBS to downgrade the sector's rating to "neutral" following its recent rally.

Analysts from the broker also raised their recommendation for the pharmaceutical and media companies to "overweight", as the drugs maker Shire advanced 42p to 2,247p while the X Factor broadcaster ITV edged up 0.5p to 87.15p.

SAB Miller was knocked back 5.5p to 2,610.5p after its Foster's business – which it recently snapped up in a £6.5bn deal – lost the licence to distribute Corona Extra in Australia. The lager is the most popular imported beer Down Under, and although the Grolsch brewer said the financial returns from the takeover remained "broadly unchanged" despite the news, Deutsche Bank claimed the loss "makes it more difficult to achieve what, in our view, are already challenging synergy numbers for Foster's".

At the same time, Natixis' scribblers were playing down the recent bid speculation that has helped SAB, saying the decision by Budweiser-owner Anheuser-Busch InBev on Thursday to up its dividend by 50 per cent showed it was unlikely to be looking for a major acquisition any time soon.

International Power closed on the Footsie's leaderboard despite analysts from both Investec and Goldman Sachs playing down rumours that France's GDF Suez could soon move for the 30 per cent of the energy group it does not already own. However, that did not stop the speculation persisting as the company sparked up 7.8p to 366p.

Down on the FTSE 250, Cable & Wireless Worldwide was lifted 2p to 36.2p following the news that the mobile phone giant Vodafone (1.55p weaker at 168.65p) now has until 29 March to decide whether to make an approach for the telecoms firm – the same deadline given to India's Tata Communications.

Dairy Crest shifted 10.4p higher to 337.3p following its announcement that it may sell its French spreads unit St Hubert, with some claiming the Cathedral City owner could pocket around £300m from a disposal.

Meanwhile, the London Stock Exchange moved up 67.5p to 965.75p after finally agreeing a deal with LCH.Clearnet which will see it take as much as 60 per cent of the clearing house.

Down on AIM, a profits warning by Software Radio Technology left the marine technology firm a huge 20.17 per cent worse off at 23.75p. The Square Mile had been expecting revenues for the year of £11.6m, but instead the group announced that – thanks to delayed orders – it was estimating just £6m.

Meanwhile, New World Oil and Gas was pegged back 0.62p to 8.38p after the explorer raised £8.5m through a placing priced at 8p a share.