Why? Well, investment bank's equity research teams are supposed to have "Chinese walls" but you would have thought it's unlikely a top investment bank would actually let its own equity research analysts predict a deal that its M&A advisory bankers are actually working on.
Perhaps, then, that's why Sky's shares have dropped like a stone - down almost 10pc in the last five days - despite a prediction yesterday from Goldman Sachs's scribblers that it could be taken over because it's a "strategic target".
Anyway, I'm well aware the Goldman Sachs note was floating around the market yesterday but I thought I would paste the juicy bits below for loyal readers who interested in it but haven't been able to access it or read it, yet.
So, pasted below are the key parts of the note from Goldman Sachs writers Katherine Ward, Jenny Lim, Rahul Argawal, Aayushi Chaudhary. They form part of the "European Tactical Research Group".
European M&A volumes are down nearly 30% in the YTD, amidst broader market weakness and a backdrop of increasing policy uncertainty. However with Bayer/Monsanto and Microsoft/LinkedIn bringing deal-making back into the headlines, and the recently launched CSPP from the ECB raising new questions about balance sheet firepower in Europe, this seems an optimal time to rebalance our M&A basket (ticker: GSTRACQN). This basket contains the stocks where our analysts see the highest likelihood of M&A activity. Since launching in June 2015, the basket is up 5.3% vs. SXXP. Over that period, 13 companies under GS European coverage have been subject to bids, of which 8 have featured in the basket.
The high fragmentation of the customer care interaction market creates a number of opportunities for consolidation in this space. On January 18, 2016, we initiated on Teleperformance, applying a rank of 2 based on our Business services M&A framework.
Our Telecom analysts have moved Bouygues to a rank of 2 (from a rank of 4) given the managements of Orange and Bouygues Telecom have formally announced talks, indicating that Bouygues appears to be a willing seller.
Elsewhere in the Telecoms, our analysts have included a 20% M&A premium weight in the price target of Tele Columbus to reflect the stock’s strategic appeal. As the final large- scale, independent cable operator left in Germany with no blocking stakeholder, our analysts believe that Tele Columbus presents an attractive M&A target and believe that meaningful synergies could accrue to any larger scale cable operator.
In the Media space, as the worlds of media and telecoms converge, with BT, Sky and TalkTalk all entering the mobile market, and Vodafone potentially entering TV, our analyst sees Sky as a strategic target, given the stickiness of the TV product and its growing pipeline of in-house content. A hypothetical move towards pan-European selling of rights could also incentivize further pan-European consolidation.
Our Oil team applies an M&A premium to strategic oil rich assets. Our analysts view the ‘SNE’ project as one of the few non-Brazilian deepwater projects that can thrive in the new world of US$60 pricing. Accordingly, they attach an M&A premium (rank of 1; 50% M&A weighting) to the asset in their SOTP valuation of Cairn Energy.
In the Financial space, our Real estate team incorporates an M&A score of 2 (from 3) in case of PSP Swiss Property based on the fact that stocks trading at a discount to NNNAV are potentially interesting to corporate acquirers and that those with particularly high levels of cost can offer potential synergies to an acquirer.
In the Biotech space, Zealand Pharma screens as an attractive target (Rank of 1). Zealand’s key asset (lixisenatide), is partnered with Sanofi. It has recently passed an FDA advisory committee vote, and hence is largely a derisked asset. In achieving FDA approval (PDUFA set for August 2016) and also with a sales launch, Zealand triggers a set of royalty payments, and hence an associated increase in cash flow. As a result, our analyst believes that Zealand offers significant strategic appeal.