Discovery Stock Jumps Even as Fox Denies Takeover Talks Report
An Australian newspaper story is "categorically untrue," a Fox spokesman says.
The stock of Discovery Communications jumped as much as 9 percent in Monday morning trading after a report in the Australian Financial Review suggested that Rupert Murdoch's 21st Century Fox had held early-stage takeover talks with the company, which Fox immediately denied.
"The AFR story is categorically untrue," a Fox spokesman told THR. Discovery declined to comment.
One Wall Street observer wondered if the report was based on misunderstood comments about the auction for Australia's Ten network, for which Discovery has been bidding. It has made a joint bid with Foxtel, which is half-owned by Murdoch's other company, publishing giant News Corp.
Still, the suggestion that Discovery could be in play boosted the cable networks company's stock in early trading. The stock went as high as $33.82. At 11 a.m., the stock was still up 8.3 percent at $33.49, but by 11:25 a.m. it was still up 7.1 percent at $33.12. Fox shares were down slightly.
"If the parties, as they maintain, are not talking, we think they ought to have a chat. We believe a merger between Fox and Discovery would make strategic sense on a number of levels," Sanford C. Bernstein analyst Todd Juenger wrote in a first reaction on Monday.
In a report in August, he had suggested Discovery as a target for Fox after its failed Time Warner bid. "We still love the idea of Discovery as Fox’s next best alternative," he said in a conference call at the time.