Disney has officially raised its offer for 21st Century Fox and all its assets. The company is now offering $38 per share to purchase Fox. This represents a total takeover bid of about $71.3 billion. The figure is a huge increase from the initial $52.4 billion that Disney was offering. The decision comes after a recent bid from Comcast that looked to undercut Disney for Fox. Comcast, the company that owns NBCUniversal, offered $65 billion all cash.
Disney is hoping to sweeten the offer by giving 21st Century Fox shareholders the opportunity to accept full cash or the equivalent in Disney shares. This may undercut Comcast’s cash offer. Many analysts had feared that the two media giants could go into a costly bidding war for 21st Century Fox, and it looks like we’re already at that phase.
Fox’s board of directors was originally scheduled to vote on the initial $52.4 billion offer by Disney on July 10th. However, the company recently announced that the meeting has been called off in order to give shareholders the time they need to assess the new bid from Disney. This will also allow Comcast to dust itself off and see if it can top what Disney is now offering.
The company that finally ends up with 21st Century Fox will own a substantial piece of the media industry. There are a number of notable media companies under the Fox brand including Fox Television, Fox Searchlight Pictures, 21st Century Fox, and Fox 2000 film production studios. Considering that both Comcast and Disney already have huge media portfolios, acquiring Fox would effectively create a super-dominant company that controls much of the content in this industry. The winning bid will also get a controlling stake in Hulu, the third-largest streaming service in the world. However, the proposed sale will not include Fox Sports which will remain under the control of New Fox.
At the moment, it seems that Disney has pulled the rug out from under Comcast’s feet. Analysts were confident that the $65 billion bid from Comcast would be enough to finally convince Fox to sell. But many still didn’t rule out the possibility of Disney countering. However, the amount of money Disney has offered has been quite a surprise.
There are also some reports indicating that Fox CEO Rupert Murdoch favors a Disney takeover. Murdoch and his sons still sit on the 21st Century Fox board and could prove decisive in this bidding war. Comcast and Disney are hoping that their attempts to take over Fox don’t escalate into a costly bidding that may just open the doors for one of the largest media deals in the US.
The Disney offer comes a few weeks after a US Federal Court threw out a Justice Department lawsuit that wanted to prevent a similar deal between AT&T and Time Warner. The decision has set precedence for such massive multibillion-dollar deals in the media space and it comes as no surprise that Disney and Comcast are following suit.