21st Century Fox withdraws bid for Time Warner
Media giant 21st Century Fox said Tuesday that it has withdrawn its bid to buy rival Time Warner. Fox Chairman Rupert Murdoch had pitched the deal last month as a way to boost Fox revenue and its bargaining leverage against cable companies for its content — only to see his company's share price tumble on investor worries.
The bid also was emphatically rejected by Time Warner, which argued that it was better off on its own. Time Warner's reluctance to negotiate and Fox's falling stock price were factors in Fox's decision to withdraw the offer.
In July, Fox offered about $80 billion for Time Warner, or about $84 a share in cash and stock. Shares of Time Warner have since risen about 20% on speculation that Murdoch's offer could set off a bidding war for the media company, which owns film and TV production studio Warner Bros. Entertainment and cable networks including HBO, TNT, TBS and CNN. The deal would have been the largest media merger since the disastrous AOL purchase of Time Warner for $162 billion in 2000.
After the announcement following the market close, shares of Time Warner fell nearly 11% to $76.12 in after-hours trading, while Fox surged $2.55, or 8.1%, to $33.85.
Murdoch has a record of being aggressive in going after companies he desires, so the announcement may lead to speculation that the withdrawal is merely a negotiation tactic. However, a person familiar with the company's decision denied Tuesday that Fox's announcement is a ploy and said that the company is not pursuing the deal further.
The proposed deal "had significant strategic merit and compelling financial rationale," and was intended as friendly bid, Murdoch said in a statement. "However, Time Warner management and its board refused to engage with us to explore an offer which was highly compelling. The reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders."
Fox also said Tuesday that its board has approved a $6 billion share-repurchase program, expected to be completed in the next 12 months.
"This significant return of capital underscores the company's ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way," the Murdoch statement said.
David Tawil, president of hedge fund Maglan Capital, said Murdoch can afford to be patient and may take a stab at another bid for Time Warner once the stock prices move in his favor.
"He can withdraw now and come back at another, more opportune time," Tawil said. "Based on the after-hours markets, Time Warner's shareholders aren't too happy about the dropped bid. If this is all part of Rupert's calculated plan to come back with another bid, then he proves his brilliance once again."
In responding to Fox's decision, Time Warner said in a statement Tuesday it "is well positioned for success with our iconic assets."