June 21 2018

Disney significantly ups its bid for 21st Century Fox

It appears that what Mickey Mouse wants, Mickey Mouse plans to get. Even if that means spending way more money than he originally planned to.

Disney has been in the process of buying 21st Century Fox for $52.4B for some time now. Then Comcast decided to spoil the party by offering $65B in an all-cash transaction. Disney has now fired back with its own counteroffer of $71.3B in a mixed offering of cash and stock. There is a catch, however, as Disney has also said it would take on $13.8B in Fox debt which brings the offer up to an astounding $85.1B.

This almost feels like Disney lightly punched Comcast on the jaw and said, “Way to go, Slugger. You gave it your all.”

Comcast now has the choice to make of whether or not to make another bid. Some analysts think they will, personally I think this is over. With the debt mixed in the new offer, this is almost impossible to top. Comcast would have to come in with an offer of somewhere around $93B to account for Disney’s $1.52B breakup fee, and I just don’t see that happening. Add in the taxes that would come out of this, the lack of a stock trade for shareholders and so on, and it’s clear the Disney offer is the superior one.

Of course, all this still has to clear regulatory hurdles, but the belief is that will happen.

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