That Disney/Fox deal we all thought was a done deal, may not be that way…
Just a couple weeks ago we found out that Comcast was trying to outbid Disney and buy Fox, now that move has been made official. Comcast has now made a $65 Billion all-cash offer to buy Fox and its TV and Movie properties and rights. Comcast’s offer “would be all-cash and at a premium to the value of the current all-share offer from Disney.” This makes things very interesting considering that Disney’s offer to buy the Fox assets was valued at only $52.4 billion.
So what exactly does this mean and what’s going to happen next? According to the original deal, if Fox receives another offer higher than the one from Disney, it has to tell Disney about it and give them 5 days to make a better offer. All signs point to Bob Iger not giving in and this could indeed lead to a bidding war between Comcast and Disney for the Fox assets.
All this comes after a court anti-trust ruling in favor of AT&T acquiring Time Warner. Many had thought that if that deal had gone through it would open the door for Comcast to get back in the picture with Fox, which is exactly what happened.
Below is the letter sent to the Fox executives from Comcast regarding their new offer:
“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 Disney transaction. 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.”
It seemed that Fox always has preferred Disney to buy their TV and Movie studio and properties over Comcast with Fox executive co-chairman Lachlan Murdoch commenting about it recently saying: “We are committed to our agreement with Disney and are working through the conditions to bring it to a closing. In addition, our directors, though, of course are aware of their fiduciary duties on behalf of all shareholders.”
Of course Fox is going to review the offer from Comcast and watch intently whatever move Disney makes next. Fox said as of Wednesday that “will carefully review and consider the Comcast proposal.” There is a schedule shareholders meeting on July 10th where they are supposed to discuss the purchase from either Disney or Comcast, it’s yet to be seen if that will be postponed or if it will continue as planned.
The next few weeks will be very telling to what Disney is going to do. It’s invested so much into a Fox deal up to this point and it would be a bad look losing at the 11th hour. Disney has been seeking various forms of financing in the event Comcast made a higher bid, so it seems like they will up their offer if needed. Disney shareholders will also have a say in how much more Disney is going to offer over the original deal if any, and we should know soon if they are really serious about buying Fox. They like Fox also have a shareholders meeting July 10th so we will for sure know which direction this is going in by then.
I want to know what you think about Comcast’s all-cash offer to buy Fox out from under Disney’s nose.
- Should Disney up its offer?
- What do you want to happen?
Let us know in the comments section below!
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News Source: The Hollywood Reporter