Century Fox (FOXA)
will hold a special meeting on July 10 for stockholders to vote on a proposal
to adopt the previously announced merger with The Walt Disney Company (DIS). 21CF's
board of directors recommends that stockholders vote in favor of the proposal
to adopt the Disney Merger Agreement and the other proposals to be voted on at
the special meeting.
Last week, Comcast (CMCSA) confirmed that it is considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney (which does not include the Fox News Channel, Fox Business Network, Fox Broadcasting Company, and certain other assets). Comcast said any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney. The structure and terms of any offer by Comcast, including with respect to both the spin-off of "New Fox" and the regulatory risk provisions and the related termination fee, would be at least as favorable to Fox shareholders as the Disney offer.
Fox's board rejected an offer from Comcast and subsequently accepted a higher bid from Disney last year. Fox has said it sees less regulatory risk in selling assets to Disney. Shareholders currently stand to receive one share of the new Fox company plus 0.2745 shares of Disney. At the time, it was a $52 bln deal excluding debt at almost 12x EBITDA.
Comcast is waiting to make a new formal offer until after June 12, when the U.S. District Court will render its verdict on the DOJ vs. AT&T (T) case. If AT&T wins, allowing it to acquire Time Warner (TWX), it would seemingly reduce regulatory risk for Comcast's Fox bid. Cable company and internet service provider Comcast is already vertically integrated after it bought NBCU from GE (GE) in 2010. If AT&T loses, Comcast could give up entirely, but legal experts think the DOJ's case against AT&T lacked substance, so we could see an epic media showdown for the Fox assets play out this summer.
The winner will get a successful movie studio, international pay TV exposure, US regional sports networks, valuable IP (content) and a controlling stake in Hulu.
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