Comcast Attempts to Upend Disney-Fox Deal with Cash Bid

Mae Love
May 8, 2018

Cable giant Comcast Corp.is getting the pieces in place to make a hostile bid for 21st Century Fox's entertainment assets should it choose to do so, according to people familiar with the situation.

Now, as again per Reuters, Comcast CEO Brian Roberts is meeting with investment banks in order to "increase the bridge facility" they have already established for acquiring majority ownership of Sky.

Comcast's bid on Fox's properties is dependant on the ruling of the U.S. Department of Justice's challenge regarding AT&T's attempt to acquire Time Warner Inc as Fox rejected Comcast's bid a year ago due to antitrust concerns. In the United States, the Depart of Justice said it opposes the deal due to antitrust concerns, with a final decision on the matter coming in June. It sounds like Comcast's new pursuit of Fox isn't a sure thing either.

The subject of the brewing M&A battle between Comcast and Disney is likely to come up for Disney chief Bob Iger Tuesday afternoon during the earnings call with Wall Street analysts. The filing turned out to be a blueprint for Comcast in refining the structure of its offer, starting with ditching a cash-and-stock combo to an all-cash offer and agreeing to a high breakup fee. Indeed, now Comcast is offering 22 billion pounds (about $30 billion) to acquire 61 percent ownership of Sky.

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Fox shares rose 5.13 per cent to US$39.99 on the news in after-hours trading in NY on Monday. Disney is already in line to own all of Sky if it is able to complete the deal for the 21st Century Fox assets.

Murdoch, who owns close to a 17 per cent stake in Fox and holds about 40 per cent of the voting power, prefers to be paid in stock rather than cash for the Fox assets, because this makes the transaction non-taxable for shareholders, sources have said. While Disney and Fox's respective boards of directors approved the deal, it hasn't gone through yet.

The filing also shows that Fox saw Disney's stock as more valuable than Comcast's, based on historic prices, and felt that a deal between Disney and Fox would generate greater long-term value.

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