The bidding war for 21st Century Fox assets escalated Wednesday, as Walt Disney Co. upped its offer to $71.3 billion and added cash as it aims to beat out Comcast’s recent $65 billion bid.
Disney’s latest offer of $38 a share is significantly higher than its December bid of $28 a share ($52.4 billion), and tops the $35 per share all-cash offer that Comcast made last week.
Aside from the higher valuation, the main difference in Disney’s new offer is that Fox stockholders can choose cash or stock.
In a statement, Fox said the Disney agreement is “superior” to Comcast’s proposal, but the company will still consider rival offers, including a revised bid from Comcast.
Fox has put off a shareholder meeting slated for July 10, at which stakeholders were to vote on the earlier Disney agreement.
“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,” said Rupert Murdoch, executive chairman of Fox, said in a statement. “We remain convinced that the combination of 21CF’s iconic assets, brands and franchises with Disney’s will create one of the greatest, most innovative companies in the world.”
Disney said in a statement that since the deal with Fox was initially announced, “the intrinsic value,” of the assets “has increased, notably due to tax reform and operating improvements.”
“The acquisition of 21st Century Fox will bring significant financial value to the shareholders of both companies, and after six months of integration planning we’re even more enthusiastic and confident in the strategic fit of the assets and the talent at Fox,” said Robert Iger, chairman and CEO of Disney, in a statement. “At a time of dynamic change in the entertainment industry, the combination of Disney’s and Fox’s unparalleled collection of businesses and franchises will allow us to create more appealing high-quality content, expand our direct-to-consumer offerings and international presence, and deliver more personalized and compelling entertainment experiences to meet growing consumer demand around the world.”
The battle between Disney and Comcast for Fox’s entertainment assets, including TV and movie production studios, regional sports networks, cable networks FX and National Geographic, and stakes in Hulu and Sky, did not come as a surprise following AT&T’s court victory last week to acquire Time Warner.
And it’s not expected to cool down any time soon.
Comcast’s offer on June 13 seemed “more like an opening salvo,” than “a best and final bid,” MoffettNathanson analyst Craig Moffett wrote in a blog post following Comcast’s announcement.
Still, today’s bid from Disney proved just how serious the company is about purchasing the Fox assets, senior analyst Michael Nathanson observed in a research note Wednesday, noting that the company remains in a good position should Comcast increase its own offer.
“Disney remains in a strong position to compete with any potential follow-on raised bid from Comcast,” Nathanson wrote. “In our view, Disney has the superior balance sheet, cost of debt, equity and rationale combined with fewer regulatory hurdles to emerge victorious over Comcast in a bidding war. Before, the only outstanding question was whether Disney’s board and management would go to the mat on this transaction? We now know the answer is clearly yes!”