May 23, 2018 / 12:18 PM / 6 months ago

Comcast prepares to top Disney's $50 billion offer for Fox

(Reuters) - Comcast Corp (CMCSA.O) confirmed on Wednesday it was preparing a higher, all-cash offer for most of the media assets of Twenty-First Century Fox (FOXA.O), setting up a bidding war with rival Walt Disney Co (DIS.N), which already has agreed to a $52-billion deal with Fox.

The largest U.S. cable operator said it was in advanced stages of readying a bid that would be superior to Disney’s all-stock offer.

“While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced,” Comcast said in a statement.

The news lifted Fox shares 1.6 percent to close at $38.77. Comcast shares closed down 1.9 percent at $31.88 and Disney shares fell 1.1 percent to $102.89.

By going public with its plans, Comcast is putting pressure on Fox and its shareholders to not rush into approving the Disney deal. Fox shareholders will vote on the Disney deal later this summer. A date has not yet been set.

Comcast may have a tough time winning over Fox’s largest shareholder, Murdoch, however. The Murdoch family owns a 17-percent stake in the U.S. TV and movie giant and would face a multi-billion dollar capital gains tax bill if he accepted an all-cash offer from Comcast, tax experts have told Reuters.

A large Fox shareholder, British activist TCI Fund Management, wrote a letter to Murdoch on Wednesday saying it was imperative for Fox’s board to run a fair auction and sell to the highest bidder.

“If Comcast formalizes a superior all-cash offer, we would support that offer over the current Disney offer,” TCI founder Christopher Hohn said in the letter. TCI owns 7.4 percent of Fox.

FILE PHOTO: A woman walks past the NBC and Comcast logos on 30 Rockefeller Plaza in midtown Manhattan in New York, U.S., February 27, 2018. REUTERS/Lucas Jackson/File Photo

Sources familiar with the matter told Reuters earlier this month that Comcast was working on financing for a cash offer worth as much as $60 billion for the Fox assets, but Wednesday’s statement was the first formal confirmation by the company.

Fox and Disney declined to comment. Fox’s Executive Chairman Lachlan Murdoch said earlier this month that the company was committed to its agreement with Disney but added that Fox’s board was aware of its fiduciary duties on behalf of all shareholders.

Jeffrey Logsdon, an analyst with JBL Advisors, said that Comcast seems intent on winning a bidding war for Fox.

“Rivalry can frequently drive prices to un-economic levels,” Logsdon said.

Comcast Chief Executive Brian Roberts will only proceed with a bid if a federal judge next month allows AT&T Inc’s (T.N) planned $85-billion acquisition of Time Warner Inc TWX.N to proceed, sources have said.

Disney in December offered stock then worth $52.4 billion to buy Fox’s film, television and international businesses to beef up its offering against streaming rivals Netflix Inc (NFLX.O) and Amazon.com Inc (AMZN.O).

Disney shares have fallen more than 3 percent since that deal, reducing the value of the offer to just over $50 billion.

Comcast, owner of NBC and Universal Pictures, has also separately made a 22 billion pound ($30 billion) offer to acquire the 61-percent stake in European pay-TV group Sky Plc SKYB.L that Fox does not already own. In doing so, it topped an earlier offer for the entirety of Sky by Fox.

A regulatory filing in April showed Comcast offered to acquire most of Fox’s assets in an all-stock deal valued at $34.41 per share, or $64 billion last November - just before Disney’s offer was agreed upon.

After a sale, Fox’s remaining assets will include Fox News, Fox Business Network and sports cable networks.

Additional reporting by Sonam Rai and Laharee Chatterjee in Bengaluru; Greg Roumeliotis in New York; Editing by Patrick Graham, Sriraj Kalluvila and Nick Zieminski

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