While some Wall Street analysts threw shade yesterday at a possible hostile takeover of 21st Century Fox by Comcast, at least one market watcher thinks the cable company would have a lot of leverage with shareholders not named Murdoch.
“If Comcast makes a hostile takeover bid, Fox management will be in a pickle,” said Derek Baine, research director at Kagan, S&P Global Market Intelligence, in a report. “The Murdoch family has super-voting stock—they vote 40% of the shares despite owning less than 20% of the equity in the company—and are said to be in favor of the Disney deal in part because they would pay less taxes in the structure arranged with Disney than they would in an all-cash offer from Comcast."
“However, rejecting a much higher hostile takeover bid from Comcast could open a flurry of shareholder lawsuits, only further serving to distract management in the midst of a major restructuring of its assets."
In December, Comcast’s mostly-stock bid of $60 billion for a large portion of 21st Century Fox assets was rejected by Fox management, headed by Rupert Murdoch, in favor of a $52 billion all-stock offer from The Walt Disney Company.
On Monday, it was reported that Comcast secured a $60 billion bridge loan from its creditors and is closely following an upcoming court decision that will determine if AT&T can buy Time Warner Inc. for $85.4 billion. Should AT&T get the green light without orders of a major, deal-breaking divestment, sources close to Comcast have reportedly said it will move once again on Fox.
“The [AT&T] transaction is likely to be approved with restrictions, and how onerous required divestitures and other concessions might be will likely weigh heavily on the minds of Comcast executives,” Baine said. “They, too, would likely have to sell some assets in order to get government approval of an acquisition of Fox."
Several Wall Street analysts said yesterday that the Murdoch family still wouldn't go for a Comcast offer. They believe U.S. regulators, who remain unhappy with how Comcast lived up to conditions relating to the 2011 purchase of NBCUniversal, won't go for the deal. The Murdochs also are said to favor the tax implications of all-stock purchases.
"Many investors in the company do not like the dual voting structure at Fox," Baine said. "In fact, 78% of the non-Murdoch-controlled votes were placed in favor of getting rid of the super-voting stock in November 2017.