News Corp’s Australian shares sank to a two-year low on Monday as the UK phone hacking scandal fallout worsened, raising concerns that a $2-billion bid for Australian pay-TV firm Austar could be derailed by political intervention. News Corp shares ended down 4.1% at A$14.2 after touching a low of A$13.7.
Investors sent News Corp shares down as much as 7% in heavy volume after Rebekah Brooks, the former head of the company’s UK paper business, was arrested on Sunday and top policeman Paul Stephenson quit over the scandal.
Austar has agreed to a $2 billion-plus takeover offer from rival Foxtel, which is owned by News Corp’s News Ltd division, billionaire James Packer’s Consolidated Media Holdings, and telecom firm Telstra. Austar closed down 3.8% while Consolidated Media fell 2.9%.
“I think people would be cautious and mark it down rather than find a reason to defend it,” said Invesco senior investment manager Jackson Leung. Invesco is News Corp’s second-largest institutional shareholder with a 1.7% stake.
However, banking sources familiar with the deal said the offer was on track and did not expect it to be derailed because Foxtel is only 25% owned by News Corp.
“I think people would be cautious and mark it down rather than find a reason to defend it,” said Invesco senior investment manager Jackson Leung. Invesco is News Corp’s second-largest institutional shareholder with a 1.7% stake.
However, banking sources familiar with the deal said the offer was on track and did not expect it to be derailed because Foxtel is only 25% owned by News Corp.
Australia’s competition watchdog is due to rule on the bid for Austar on July 21.