Disney Raises Offer in Fox Fight With Comcast

"Disney is going for the knockout punch, and they just may have delivered it," an investment banker says.
Matthew HellerJune 20, 2018

The bidding war over the bulk of 21st Century Fox’s media assets heated up as Walt Disney Co. sweetened its offer to $71.3 billion on Wednesday, topping rival Comcast.

Disney’s revised offer of $38 a share, which would be split 50-50 in cash and stock, is $10 a share higher than its first bid in December 2017. Comcast offered $35 a share in cash last week.

Disney CEO Robert Iger reportedly met with Fox Executive Chairman Rupert Murdoch in London to hammer out the new deal. Fox said it included “a package of consideration, flexibility, and deal certainty enhancements that is superior to [Comcast’s] proposal.”

“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,” Murdoch said Wednesday in a news release.

As The Los Angeles Times reports, Disney’s cash-and-stock offer “is designed to appeal to a range of investors: Fox shareholders could get cash as well as the long-term value of owning Disney shares. Comcast’s all cash-offer does not offer the long-term upside.”

“Disney is going for the knockout punch, and they just may have delivered it,” Lloyd Greif, a Los Angeles investment banker, told the Times. “It also makes it crystal-clear who Rupert wants as his go-forward partner. Bob [Iger] didn’t come up with this counter-offer in a vacuum — he had help.”

But the bidding war may not be over just yet. “Based on our merger models, we think bids from [Comcast] or [Disney] could reach as high as $80 billion,” John Janedis, an analyst at Jefferies, wrote in a client note.

Iger said in a conference call that Disney’s resolve to close the deal has only grown stronger after six months of studying Fox’s businesses and that “direct-to-consumer distribution has become an even more compelling proposition.”

“We have a much greater appreciation for the potential that these assets represent to us, to our strategy today and to the strategy we intend to deploy long-term,” he said.

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