UPDATE (Wednesday, June 20):
Disney has come back with a counter bid against Comcast’s $65 billion all cash offering to buy 21st Century Fox. Disney’s new bid is $71.3 billion in cash and stocks. Its previous bid was for $52.4 billion, all in stocks. This averages out to $38 per share, up from its original offer which averaged $28 million per share. Fox’s offer amounted to $35 per share. Disney feels that this offer is superior to Comcast’s and allows Fox shareholders to choose either cash or stocks.
Fox executive chairman Rupert Murdoch and Disney CEO Bob Iger met Tuesday night before Fox shareholders convened on Wednesday to determine which company’s offer to accept. Murdoch previously shot down attempts by Comcast to purchase Fox and he remains committed to a Fox/Disney merger.
He issued this statement on Wednesday:
“We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry.
“We remain convinced that the combination of [Fox’s] iconic assets, brands and franchises with Disney’s will create one of the greatest, most innovative companies in the world.”
It seems that Murdoch has made up his mind, but the decision isn’t completely his to make. Interestingly, as this race continues, stock values for all three involved companies has increased, although Comcast saw the smallest bump, just 0.2%.
There is still the possibility that Murdoch could be out-voted and that Fox will go to Comcast, but it’s unlikely as not only is Murdoch a major shareholder, but several members of his family also hold stock and are likely to side with him. Barring anything crazy, it appears that Fox will go to Disney as has been the plan all along.
In December, after months of speculation, Disney made its official buyout bid for 21st Century Fox– for $52.4 billion in Disney stock, which was, at that time, okay’d by Fox shareholders. The US Department of Justice delayed the closing of this deal in order to confirm that this deal did not create a monopoly. In the meantime, Comcast made it known that they were also interested in acquiring Fox, but would only make a bid if a separate but similar deal, allowing AT&T to buy out Time Warner, was approved, which it was last week. Comcast placed a $65 billion all cash bid to buy Fox. Not only is Comcast’s offer for more, but cash has a fixed value, whereas it is expected that Disney stocks will drop in value if their proposed acquisition goes through.
Whichever bidder wins will acquire “Fox’s movie studios, networks National Geographic and FX, Star TV, stakes in Sky, Endemol Shine Group and Hulu as well as regional sports networks.”
Fox shareholders were to convene in New York on July 10 to vote on whether or not to accept Disney’s original buyout offer, but the Comcast bid now complicates things. It’s possible that Fox may ask to delay this vote. On Disney’s side, they had a couple of options. They could convert part– or even all– of its bid to cash. Or they could simply up the number of shares they were offering. But it appears that what Disney plans to do is maintain their current stock bid but to add cash on top of that to meet or surpass Comcast’s bid.
Fox’s board will meet on Wednesday to consider Comcast’s offer. If they determine that the Comcast bid is better than Disney’s, Disney will then have five days to counter offer.
Disney stock is suffering majorly because of this deal. Its value had already been weakened by the weak performance of ‘Solo: A Star Wars Story‘. With this deal looming, the stock continues to drop. It was down 1.6 percent and has dropped into “Sell” territory. If Disney increases their bid, it is believed that this would decrease the stock value and if Fox chooses to go with AT&T’s deal, Disney stock would also fall because it will not be able to reap the long term benefits that this deal was supposed to bring with it.
Comcast had pursued Fox before, but under the control of the Murdoch family, Fox opted to go with Disney. That situation has changed. In a letter to the Fox board, Comcast CEO Brian Roberts wrote:
“We were disappointed when [Fox] decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price. We are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.”
As stated, things should become more clear on Wednesday after the Fox board meets and decides whether or not they will entertain Comcast’s offer. If they reject it outright, the deal with Disney will go through as it stands, but if Fox decides to go with Comcast, Disney will have the option of increasing or altering its bid.
Stay tuned for more updates!