This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The battle for 21st Century Fox intensified this week between Walt Disney and Comcast. Shares in Fox closed Wednesday’s session higher by 7.54% after Disney increased its bid for the Murdoch-run media conglomerate to $71.3 billion. That is equivalent to $38 per share in a deal that is a mix of cash and stock. It is a sharp increase from Disney’s previous offer of $28 per share, equivalent to $52.4 billion in stock, and tops rival Comcast’s $35 per share all-cash offer last week, which valued Fox at $65 billion. Fox has said that Disney’s latest offer is superior, and pressure is now on Comcast to return to the table with a counter-bid.
Fox must now choose between an all-cash offer from Comcast and a cash and stock mix from Disney. Some analysts say the Murdoch family may prefer the latter for tax reasons. Fox was scheduled to hold a shareholder vote on 10 July, but this has now been delayed to give the company time to make its decision.
Disney is close to getting the deal over the necessary regulatory hurdles, according to a Bloomberg report citing a person familiar with the matter, suggesting that the Justice Department could approve the tie up in a fortnight. Disney CEO, Bob Iger, said, ‘we have a much better opportunity in terms of approval and the timing of that approval than Comcast does in this case,’ suggesting that he is confident about winning the deal.
Disney’s increased bid to top Comcast is a ‘smart strategic poker move’, according to GBH Insights’ head of technology research, Daniel Ives. He says this will help Disney ‘to catalyse its streaming and content ambitions over the coming years. This deal, if successful in its battle with Comcast, would put Disney in the catbird’s seat in terms of being the content king, and with its streaming service set to launch in 2019, Iger has a clear runway to gain market and mind share from the likes of Netflix’. Ives said that if Comcast beats Disney to these Fox assets, it would be a ‘devastating and hard to recover blow’, underscoring the significance of this media battle.
.jpg)
