Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Comcast reportedly seeking support from banks to start a bidding war over 21st Century Fox assets

Rupert Murdoch may well like the idea of a bidding war for the assets he has agreed to sell to Walt Disney but as the Scots might say, Walt disnae ...
Rupert Murdoch and Jerry Hall
Murdoch is said to favour an all-share offer

News agency Reuters reported that Comcast Corp (NASDAQ:CMCSA) is seeking finance so it can top the Disney bid for various media assets of Twenty-First Century Fox Inc (NASDAQ:FOXA).

Cable TV giant Comcast rained on Fox's parade by topping the latter's £19bn offer for pay-TV behemoth Sky PLC (LON:SKY) with a £22bn bid but Fox shareholders are likely to be happier at this latest twist in Comast-Sky-Fox-Disney ménage à quatre.

READ: Sky pulls recommendation for Fox takeover bid after higher offer from Comcast

Reuters reported that Comcast is asking investment banks to increase a bridge financing facility by as much as US$60bn so it can make an all-cash offer for the media assets that Fox has agreed to sell to Walt Disney Co (NYSE:DIS) for US$52bn.

As if this tangle of bids and counter-bids could be any more complicated, Reuters says that Comcast's head honcho, Brian Roberts, will only pull the trigger on the Fox deal if a federal judge green-lights AT&T Inc's (NYSE:T) planned US$85bn acquisition of Time Warner Inc (NYSE:TWX).

Fox supremo Rupert Murdoch clearly thinks there is a high chance of the authorities blocking any move by Comcast for the assets Fox is looking to sell as he rebuffed an offer from Comcast last year for those assets that was more generous than the terms being offered by Disney.

Reuters reports that Murdoch, whose stake in Fox is close to 17%, would prefer an all-share offer for the Fox assets as a way of thwarting the taxman.

UBS addressed the issue of how this development might affect the shares of Sky.

“At the margin, the news may be seen as negative for investor sentiment on Sky as it may limit Comcast’s ability to counter-bid should Fox raise its offer for Sky,” UBS said.

“Assuming Fox continues to pursue a deal with Disney, Fox will need to raise its bid for Sky from its current level of 1,075p plus dividends in order to win control. An increase would be supported by the recent benign outcome of the EPL [English Premier League] auction that has resulted in consensus estimates for Sky being raised by 20-30% for FY-20E onwards. The UK government has stated that it will give its ruling on the Fox/Sky deal by 13 June and it is at this point we think we could see Fox raising its bid for Sky,” UBS said.

UBS's stand-alone valuation for Sky is 1,320p but it sees an additional 180p of acquisition upside to derive its price target of 1,500p.

Shares in Sky were down 1.5% at 1,352p in mid-morning trading.

--- adds broker comment and Sky share price ---

View full CMCSA profile View Profile

Comcast Timeline

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use