Fox stock rose on Disney’s higher offer
Media giant Disney (DIS) has recently made a higher bid than rival bidder Comcast (CMCSA) for most of the assets of 21st Century Fox (FOXA). Disney is now offering more than $71.3 billion for Fox’s film, television, and entertainment assets, around 36% higher than its initial bid of $52.4 billion in December.
Following the announcement, Comcast shares were up 1.77% to $33.39 on June 20, while Disney closed up 0.99% to $107.15 per share. Fox stock jumped ~7.54% to about $48.08 per share.
Disney has sweetened its bid with a cash and stock bid to win Fox assets. Disney is offering $38 a share, compared to Comcast’s cash bid of $35 a share announced on June 13, a day after AT&T (T) received approval for its Time Warner merger. On June 15, AT&T completed its merger. Disney is also to take on about $13.8 billion of Fox’s net debt, implying a total transaction value of about $85.1 billion.
On a higher offer, the Fox board received Disney’s proposal. However, Fox has postponed its scheduled shareholder vote (on July 10) on the Disney deal to give investors time to consider the latest proposal.
Per sources, Disney is expected to receive US antitrust approval soon. So Comcast has less time to decide on whether it should outbid Disney again for Fox’s assets.
Fox assets are important for both Disney and Comcast
Disney’s superior offer came as retaliation to Comcast’s offer price announced last week. Comcast had announced it would buy the same assets of Fox for $65.4 billion, challenging Disney.
Both Disney and Comcast want to grab Fox’s premium media content to better compete with fast-growing digital rivals like Netflix (NFLX) and Amazon, which are attracting traditional pay-TV subscribers with lower video entertainment prices. As you can see from the chart above, the SVOD (subscription video on demand) market has been developing rapidly and is expected to hit $108.6 billion by 2026, according to Future Market Insights.
Fox’s international media company Star India and European pay-TV company Sky Plc should also help these companies grow overseas.