DIS Walt Disney Co

Firm lines up financing for hostile bid for assets but hasn't decided to go ahead

By Amol Sharma 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 8, 2018).

Cable giant Comcast Corp. is getting the pieces in place to make a hostile bid for 21st Century Fox's entertainment assets should it choose to do so, according to people familiar with the situation.

Fox agreed in December to sell the assets in question to Walt Disney Co. for $52.4 billion in stock.

Comcast is considering making a play to break up that deal, and has lined up around $60 billion in financing to make an all-cash offer for the Fox assets, the people say.

Comcast hasn't yet decided whether to proceed with a hostile bid. One pivotal factor is the outcome of the government's lawsuit to stop the pending merger of AT&T Inc. and Time Warner Inc. If the companies are successful and their deal survives, Comcast would be emboldened to pursue the Fox assets, the people said.

Arguments in the antitrust case against the deal concluded last week, with the judge saying he would announce his ruling on June 12.

The assets Comcast and Disney are seeking to purchase include the Twentieth Century Fox TV and film studio, cable networks and international properties including Fox's 39% stake in European pay TV operator Sky PLC.

Separately, on another track, Comcast and Fox are each vying for full control of Sky and have lobbed in bids. Comcast is securing financing from banks that would allow it to pursue a bid for the Fox entertainment assets and consolidate 100% ownership of Sky, the people familiar with the situation said.

Reuters earlier reported that Comcast was asking banks to arrange financing that would give it the ability to pursue an all-cash bid for the Fox assets.

Comcast has circled the Fox assets for months. Fox, citing regulatory concerns, turned down a Comcast stock offer in the low $60 billion range before sealing the Disney deal, people familiar with the matter have said. Comcast's offer was a 16% premium to Disney's, according to a securities filing and people close to the deal talks.

It is possible Comcast could bid a bit lower than last time if it pursues a hostile effort, one of the people familiar with the situation said. The cable company believes an all-cash offer would be compelling to most Fox shareholders.

One concern raised from the Fox side during the last round of deliberations was the relative value of Comcast shares versus Disney shares, so an all-cash bid would take that off the table, the person said.

Comcast shares have been under pressure in recent months. The cable company's chief financial officer, Michael Cavanagh, said on an earnings call late last month that Comcast was unlikely to use its stock to make deals. He said the company's strong balance sheet will give it flexibility to consider opportunities "at times like this."

21st Century Fox and Wall Street Journal-parent News Corp share common ownership.

(END) Dow Jones Newswires

May 08, 2018 02:47 ET (06:47 GMT)

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