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As expected, Comcast has outbid The Walt Disney Company for a number of 21st Century Fox assets up for grabs.

  • Comcast’s offer values the assets at $65 billion, while Disney’s bid was $52.4 billion ($66.1 billion minus $13.7 billion in debt from Fox). This means Comcast is putting a 19% premium on their offer.
  • Additionally, while Disney’s bid is a stock offer, Comast’s is all-cash.
  • As for other details in the proposal, Comcast is agreeing to meet the specifics of Disney’s deal, including a $2.5 billion reverse termination fee. Moreover, the company has offered to cover the $1.525 billion 21CF would owe Disney for breaking off the current deal.
  • Comcast had previously made bids to buy the 21st Century Fox assets, but their offers were rejected citing regulatory concerns.
  • Not by coincidence then, this move comes after a judge ruled yesterday that AT&T could proceed with its acquisition of Time Warner.
  • In the event that Fox decides to entertain Comcast’s offer, Disney would still have the chance to create a counteroffer.

What we think:

  • While 21st Century Fox will need to consider Comcast’s offer, it stands to reason that Rupert Murdoch would likely still prefer a deal with Disney.
  • For one, given the regulatory headstart Disney has, a transaction with the Mouse House would almost surely close quicker than a Comcast sale would, however Comcast disputes this.
  • Additionally, some analysts have suggested that Rupert Murdoch may view being the single largest shareholder in The Walt Disney Company to be a matter of prestige.
  • That said, with Fox being a public company, Murdoch may not have the final say in the matter. Instead, the board of directors and the 21st Century Fox shareholders may step in if Comcast makes a compelling case.
  • On that note, both Disney and Fox are set to hold special shareholder meetings in New York on July 10th where matters related to the proposed transaction will be voted on.

The Letter Comcast Sent 21st Century Fox:

Dear Rupert, Lachlan and James,

We have long admired what the Murdoch family has built at Twenty-First Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.

So, we were disappointed when 21CF decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price. We have reviewed the publicly available terms of the proposed Disney transaction, as well as the joint proxy statement/prospectus filed with the SEC describing the reasons for the 21CF Board of Directors’ decision. In light of yesterday’s decision in the AT&T/Time Warner case, the limited time prior to your shareholders’ meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.

Our new proposal offers 21CF shareholders $35.00 per share in cash and 100% of the shares of New Fox after giving effect to its proposed spinoff, providing superior and more certain value as compared to Disney’s all-stock offer. Our proposal represents a premium of approximately 19% to the value of Disney’s offer as of noon today. We are highly confident in our ability to finance the transaction, and our offer includes no financing-related conditions.

We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction. Accordingly, we are offering the same regulatory commitments as the ones 21CF has already obtained from Disney, including the same $2.5 billion reverse termination fee agreed to by Disney. To further evidence our commitment, we also are offering to reimburse the $1.525 billion break-up fee to be paid by you to Disney, for a total cost to Comcast of $4.025 billion, in the highly unlikely scenario that our transaction does not close because we fail to obtain all necessary regulatory approvals.

We welcome the opportunity to discuss the regulatory issues presented by each deal. We note that there should not be any meaningful difference in the timing of the U.S. antitrust review between a Comcast and Disney transaction. We have made our HSR filing today, which formally begins our regulatory review at the DOJ. In addition, we have already submitted a large volume of documents and data to the DOJ in connection with its review of the Disneytransaction. This information largely overlaps with the information that the DOJ will need to review a Comcast transaction. As a result, our transaction should be reviewable by the DOJ in the same cycle as Disney’s transaction. We similarly expect that our transaction should be reviewable by international regulators in as timely a manner as the Disney transaction, and should be as or more likely to receive international approvals, given our relatively small presence outside the U.S.

Our Board of Directors has unanimously approved this proposal, and no Comcast shareholder vote will be required for this transaction.

Because of your decision to schedule the vote on the Disney merger proposal for July 10, time is of the essence for your consideration of our proposal. We are available to meet at any time to answer questions of the Board, management or your advisors, so that you are in a position to validate the superiority of our offer, and negotiate and enter into a merger agreement, as soon as possible thereafter. Given the very short time frame, today we are filing a preliminary proxy statement with the SEC in opposition to the Disney merger proposal, as we have been advised this is necessary to be in a position to be able to communicate with your shareholders directly regarding the votes they are being asked to cast on July 10. We hope this is precautionary only, as we expect to work together to reach an agreement over the next several days.

More detailed information regarding our proposal is attached.

I look forward to our discussions and working with you toward completing this exciting transaction for the Fox shareholders.

Very truly yours,

/s/ Brian L. Roberts

Brian L. Roberts
Chairman and CEO

21st Century Fox’s response:


“21st Century Fox remains subject to the Disney Merger Agreement. Consistent with the terms of this agreement and the fiduciary duties of the Company’s directors, 21st Century Fox’s Board, in consultation with its outside legal counsel and financial advisors, will carefully review and consider the Comcast proposal.

21st Century Fox has not yet made a determination, in light of Comcast’s proposal, as to whether it will postpone or adjourn the July 10, 2018 special meeting of stockholders to consider certain proposals related to the Disney Merger Agreement.”

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