Disney raises bid for Fox assets to $71.3 billion in cash and stock, topping Comcast

  • Fox calls the new Disney offer "superior" to the Comcast proposal made last week.
  • Comcast's all-cash bid of $35 a share would be valued at $65 billion.
  • Fox's Rupert Murdoch says a Fox-Disney combination "will create one of the greatest, most innovative companies in the world."

Walt Disney Co. raised its bid for Twenty-First Century Fox's movie and television assets to $71.3 billion, the companies announced Wednesday.

The new bid is $38 a share, up from Disney's $28 a share offer in December and rivaling Comcast's $35 a share all-cash bid last week. Comcast's deal is valued at $65 billion.

The bidding war was expected as the two media giants battle over Fox's movie production business as well as networks National Geographic and FX, Star TV, stakes in Sky, Endemol Shine Group, Hulu and regional sports networks.

Disney's new bid allows Fox shareholders to choose cash or stock. Fox called the new Disney offer "superior" to the Comcast proposal.

Fox's Executive Chairman Rupert Murdoch and Disney CEO Robert Iger met Tuesday night before this new bid was submitted, sources told CNBC's David Faber.

Fox shares were up 7.3 percent Wednesday, while shares of Disney rose around 1 percent. Iger said on a conference call that Disney does not expect to complete the $20 billion share buyback it announced in December.

Shares of CNBC parent Comcast jumped 1.8 percent Wednesday, moving after Bloomberg News reported that the Justice Department was set to approve Disney's bid in as soon as two weeks. The company has agreed to sell some assets to gain approval, a source told Bloomberg.

The Justice Department, Fox and Disney did not respond immediately to requests for comment from CNBC. Comcast declined to comment.

In a statement on Wednesday, Murdoch said, "We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry."

The statement added, "We remain convinced that the combination of [Fox's] iconic assets, brands and franchises with Disney's will create one of the greatest, most innovative companies in the world."

Iger said in a statement Wednesday that the combination with the Fox units would allow Disney to create more appealing content, expand its direct-to-consumer offerings and international presence and "deliver more personalized and compelling entertainment experiences to meet growing consumer demand around the world."

Bob Iger, chairman and chief executive officer of The Walt Disney Co.
Patrick T. Fallon | Bloomberg | Getty Images
Bob Iger, chairman and chief executive officer of The Walt Disney Co.

Disney's bid in December was a stock deal worth $52.4 billion at the time, but CNBC has reported that the company was willing to add cash to sweeten the offer if a rival stepped in. Disney said Wednesday, "Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements."

Fox's board had a scheduled meeting on Wednesday at which it was expected to talk about Comcast's rival bid.

Fox said its board hadn't concluded Comcast's unsolicited bid "could reasonably be expected to result in a 'Company Superior Proposal' under the Disney Merger Agreement."

A spokesman for Comcast said the company does not have a comment right now.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

Read the full press releases here:


21st Century Fox Board Announces Amended and Restated Merger Agreement With Disney

NEW YORK, June 20, 2018 /PRNewswire/ -- Twenty-First Century Fox, Inc. ("21CF") (NASDAQ: FOXA, FOX) announced today that it has entered into an amended and restated merger agreement with The Walt Disney Company ("Disney") (NYSE: DIS) pursuant to which Disney has agreed to acquire for a price of $38 per 21CF share the same businesses Disney agreed to acquire under the previously announced merger agreement between 21CF and Disney (the "Disney Merger Agreement"). This price represents a significant increase over the purchase price of approximately $28 per share included in the Disney Merger Agreement when it was announced in December 2017. The amended and restated Disney Merger Agreement offers a package of consideration, flexibility and deal certainty enhancements that is superior to the proposal made by the Comcast Corporation on June 13, 2018.

Under the amended and restated Disney Merger Agreement, Disney would acquire those businesses on substantially the same terms, except that, among other things, Disney's offer allows 21CF stockholders to elect to receive their consideration, on a value equalized basis, in the form of cash or stock, subject to 50/50 proration. The collar on the stock consideration will ensure that 21st Century Fox shareholders will receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

"We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry," said Rupert Murdoch, Executive Chairman of 21st Century Fox. "We remain convinced that the combination of 21CF's iconic assets, brands and franchises with Disney's will create one of the greatest, most innovative companies in the world."

In light of the revised terms contained in the amended and restated Disney Merger Agreement, 21CF's board, after consultation with its outside legal counsel and financial advisors, has not concluded that the unsolicited proposal it received on June 13, 2018 from Comcast could reasonably be expected to result in a "Company Superior Proposal" under the Disney Merger Agreement.

However, the amended and restated Disney Merger Agreement contains no changes to the provisions relating to the Company's directors' ability to evaluate a competing proposal.
As announced on May 30, 2018, 21CF has established a record date of May 29, 2018 and a meeting date of July 10, 2018, for a special meeting of its stockholders to, among other things, consider and vote on a proposal to adopt the Disney Merger Agreement. 21CF has determined to postpone its special meeting of stockholders to a future date in order to provide stockholders the opportunity to evaluate the terms of Disney's revised proposal and other developments to date. Once 21CF determines the new date for 21CF's special meeting of stockholders, the date will be communicated to 21CF stockholders.

The Walt Disney Company Signs Amended Acquisition Agreement To Acquire Twenty-First Century Fox, Inc., For $71.3 Billion In Cash And Stock

New $38-per-share acquisition gives 21st Century Fox shareholders option to electcash or stock in the combined entity

BURBANK, Calif., June 20, 2018—The Walt Disney Company (NYSE: DIS) todayannounced that it has signed an amended acquisition agreement with Twenty-First Century Fox, Inc. ("21st Century Fox" —NASDAQ: FOXA, FOX), for $38 per share in cash and stock. Disney will acquire 21st Century Fox immediately following the spin-off of the businesses comprising "New Fox" as previously announced.

Under the amended agreement, 21st Century Fox shareholders may elect to receive, for each share of 21st Century Fox common stock, $38 in either cash or shares of Disney common stock (subject to adjustment for certain tax liabilities as described in the original acquisition announcement). The overall mix of consideration paid to 21st Century Fox shareholders will be approximately 50% cash and 50% stock. The stock consideration is subject to a collar (described below under 'Transaction Details') and is expected to be tax-free to 21st Century Fox shareholders.

The 21st Century Fox businesses to be acquired by Disney remain the same as under the original agreement. Since the original agreement was announced, the intrinsic value ofthese assets has increased, notably due to tax reform and operating improvements.

"The acquisition of 21st Century Fox will bring significant financial value to the shareholders of both companies, and after six months of integration planning we're even more enthusiastic and confident in the strategic fit of the assets and the talent at Fox," said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. "At a time of dynamic change in the entertainment industry, the combination of Disney's and Fox's unparalleled collection of businesses and franchises will allow us to create more appealing high-quality content, expand our direct-to consumer offerings and international presence, and deliver more personalized and compelling entertainment experiences to meet growing consumer demand around the world."

Disney is expected to pay a total of approximately $35.7 billion in cash and issue approximately 343 million new shares to 21st Century Fox shareholders, representing about a 19% stake in Disney on a pro forma basis.

The collar on the stock consideration will ensure that 21st Century Fox shareholders will receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32. 21st Century Fox shareholders will receive an exchange ratio of 0.3324 shares of Disney common stock if the average Disney stock price at closing is above $114.32 and 0.4063 shares of Disney common stock if the average Disney stock price at closing is below $93.53. Elections of cash and stock will be subject to proration to the extent cash or stock is oversubscribed.

Disney will also assume about $13.8 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $71.3 billion and a total transaction value of approximately $85.1 billion (assuming no tax adjustment). Disney has secured financing commitments for the cash portion of the acquisition.

The amended transaction is expected to be accretive to Disney earnings per share before the impact of purchase accounting for the second fiscal year after the close of the transaction, and to yield at least $2 billion in cost synergies by 2021 from operating efficiencies realized through the combination of businesses.

As announced in the original acquisition agreement, the businesses to be acquired byDisney include 21st Century Fox's film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000 Pictures; Fox's television creative units, Twentieth Century Fox Television, FX Productions and Fox 21; FX Networks; National Geographic Partners; Fox Sports Regional Networks; Fox Networks Group International; Star India; and Fox's interests in Hulu, Sky plc, and Tata Sky. The acquisition will occur immediately after the spin-off by 21st Century Fox of the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company referred to as New Fox. If 21st Century Fox completes its acquisition of the 61% of Sky it doesn't already own prior to closing of the Disney acquisition, Disney would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.

The acquisition will significantly increase Disney's international footprint and expand the content and distribution for its direct-to-consumer (DTC) offerings, which include ESPN+ for sports fans; a Disney-branded streaming video-on-demand service launching in late 2019 that will feature Disney, Pixar, Marvel and Star Wars films along with a host of exclusive original content and library titles; and its ownership stake in Hulu. As a result of the acquisition, Disney will hold a controlling stake in Hulu.

Disney believes the transaction has a clear and timely path to regulatory approval. Both companies have spent the past six months working toward meeting all conditions necessary for closing. In the amended agreement, Disney has increased the scope of its commitment to take actions required to secure regulatory approval.

The amended agreement has been approved by the boards of directors of Disney and 21st Century Fox. The transaction is subject to approval by Disney and 21st Century Fox shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions. Both companies had been scheduled to hold shareholder meetings on the previously announced transaction on July 10. In light of the amended agreement, the companies are required to prepare updated SEC filings and proxy materials which will be sent to shareholders. A new date for the shareholder meetings will be announced.

Disney will conduct an investor conference call at approximately 8:30 a.m. EDT / 5:30a.m. PDT today, June 20, 2018. To listen to the live webcast, please visit www.disney.com/investors. The webcast presentation will be archived.