NEW YORK -- Walt Disney Co. and 21st Century Fox struck a new deal Wednesday; Disney agreed to pay $71.3 billion for Fox entertainment assets, surpassing the $65 billion offer from Comcast Corp.
Fox said the amended deal is "superior" to the offer made by Comcast and its board accepted Disney's offer, although the acceptance is subject to shareholder approval and does not rule out evaluating a competing bid.
Disney said it amended its original Dec. 21 agreement with Fox in which Disney offered $52.8 billion.
Under the new Disney deal, Fox shareholders would receive $38 a share in either cash or Disney common stock, or a 50-50 combination of cash and Disney stock.
"We ... 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," Rupert Murdoch, Fox's executive chairman, said in a statement. "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."
Disney wants the Fox assets -- which include the company's movie studio, entertainment cable networks and TV production units -- to expand its global reach and build a library of content that can be offered as a direct-to-consumer streaming service that can compete with Netflix.
"The acquisition of 21st Century Fox will bring significant value to the shareholders of both companies, and after six months of integration planning we're more enthusiastic and confident in the strategic fit of the assets and the talent at Fox," Disney Chairman Robert Iger said in a statement.
Iger reportedly met with Murdoch on Tuesday in London to hammer out the new deal.
Comcast, which made its offer for the Fox assets June 13, has not indicated whether it will respond with a sweetened bid of its own.
Iger said in a conference call that "direct-to-consumer distribution has actually become a more compelling proposition" since Disney made its original offer. Streaming video continues to pull viewers away from the the traditional TV business, providing people with a wider array of choices and the ability to watch their favorite shows at their convenience.
Disney also would expand its reach to Europe, India and Latin America with the acquisition: It would take over Fox's media conglomerate Star India and Fox's 39 percent share of the pan-European TV service Sky. (Meanwhile, Fox is looking to take full control of Sky; if it succeeds, Disney would get the whole thing.) Fox has a presence in Latin America with National Geographic and several other channels aimed at a family viewing audience; Disney would gain those, too.
Disney said it expects to pay a total of $35.7 billion in cash and issue 343 million new shares of stock to Fox shareholders, giving them a 19 percent stake in Disney.
The July 10 shareholder meetings previously announced to vote on the transaction will be rescheduled, as Disney and Fox will need to update their filings with the Securities and Exchange Commission.
Lloyd Greif, a Los Angeles investment banker who is not involved in the current deal, said the new agreement indicates Murdoch favors an agreement with Disney rather than Comcast.
"Disney is going for the knockout punch, and they just may have delivered it," said Greif. "It also makes it crystal-clear who Rupert wants as his go-forward partner. Bob [Iger] didn't come up with this counteroffer in a vacuum -- he had help."
Comcast now must decide how much higher it can go without upsetting more shareholders. And part of Comcast's calculus will be that Murdoch now has twice chosen Disney over Comcast: once in December and again this week. Comcast will have to figure out if there is any deal sweetener that can change Murdoch's mind.
Disney's cash-and-stock offer is designed to appeal to a range of investors: Fox shareholders could get cash as well as the long-term value of owning Disney shares. Comcast's all cash-offer does not offer the long-term upside.
Business on 06/21/2018