Tag: WGAW

BENGALURU:  Twenty-First Century Fox (Fox) withdrew its proposal to acquire Time Warner Inc.  Excerpts of the Fox press release – chairman and CEO Rupert Murdoch commented: “We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands.  Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly.  However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling. Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders.  These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer.”

“21st Century Fox’s future has never been brighter.  The strength of our leading franchises, combined with the power of our emerging growth businesses and the leadership positions of our international enterprises put us on a path for even greater success.”

The Board today authorised a USD 6 billion share repurchase programme. The repurchase of an additional USD 6 billion of Class A Common Stock is expected to be completed in the next 12 months. 

Murdoch continued, “This significant return of capital underscores the Company’s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way.”

Time Warner responded with a press release. Excerpts of Time Warner’s statement regarding the announcement by Twenty-First Century Fox that it has withdrawn its proposal to acquire all of the outstanding shares of Time Warner.

“Time Warner’s Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders.  Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable network group, and the world’s largest film and television studio.  We thank our stockholders for their continued support. Citigroup Global Markets Inc. is acting as financial advisor to Time Warner. Cravath, Swaine & Moore LLP is acting as legal advisor to Time Warner.”

BENGALURU: It was a deal, the possibility of which they had announced in May 2014. The media pundits said that it was inevitable, now that Rupert Murdoch’s 21st Century Fox (Fox) bid to buy out Time Warner had been rejected by the latter in mid-July 2014.  Fox needed to sweeten the offer with a higher bid and with the proceeds from the BSkyB deal, the company would not have to go in for a very big addition to its debt.

Fox has gone ahead and done just that. Last week on Friday, Fox through a press release announced that it will transfer Sky Italia and its 57.4 per cent interest in Sky Deutschland to BSkyB to create a pan-European digital television leader through the combination of these assets.

The release said further: ‘In exchange for the transfer, 21st Century Fox will receive approximately $ 9.3 billion in value from BSkyB comprised of approximately $ 8.6 billion in cash and BSkyB’s 21 per cent interest in National Geographic Channels International, raising 21st Century Fox’s ownership stake to 73 per cent. In addition, 21st Century Fox will participate in BSkyB’s announced equity offering by purchasing approximately $ 900 million of additional shares in BSkyB to maintain the Company’s 39.1 per cent ownership interest. The net, after-tax cash proceeds to be received by 21st Century Fox upon completion of all the elements of this transaction will approximate $ 7.2 billion. The agreement is subject to regulatory approvals, the approval of BSkyB stockholders and customary closing conditions.’

Confirming the deal, in a message to his staff, Sky CEO Jeremy Darroch said, “The three companies complement each other well. We all operate businesses that look similar and offer similar products, and of course we share the same brand. But our affiliation goes deeper than that. We may work in different countries, but our corporate culture and values are familiar. Our teams know each other well and have a history of working together. So I am confident that this is a combination that will work well.” Darroch added, “We expect this process to take several months to complete.”

So far Fox has chosen not to directly comment about the rejection of its bid or move by the Time Warner board that would stymie any action by 15 per cent or more of Time Warner’s shareholders that could favour bids by Fox and force Time Warner to consider being taken over. Fox has not commented on the Writers Guild of America, West (WGAW) speaking against any agglomeration of media companies and more specifically the WGAW’s opposition to Fox’s proposal for taking over Time Warner.

However, in an oblique statement, the Fox release quotes its chairman and CEO, the 83 year old Rupert Murdoch as saying, “Our renewed authorisation for our share buyback program will be executed regardless of any potential acquisition or investment activity by the company. 21st Century Fox’s number one priority is increasing shareholder value in a disciplined manner and as a result, we will only consider transactions that fully support this objective.”

Bloomberg reported on Saturday that Fox  is open to giving Time Warner shareholders seats on the board of the combined company should its $ 75 billion takeover bid succeed, attributing this to people familiar with the situation. Media reports suggest that the offer for board representation could appear in a revised proposal and that one of the reasons for Time Warner’s rejection of Fox’s overtures is that its shareholders are being offered non-voting shares by Fox.

So it is more of a question of ‘when’ and not ‘if’ a fresh proposal is made by Fox. We should hear soon more about the Fox –Time Warner takeover/merger saga that will take two to three years to consummate, if it happens.