Comcast Unveils $65 Billion All-Cash Bid for Fox, Topping Walt Disney's Offer

"Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney," the cable giant had previously said.

Comcast Corp. has made it official, unveiling an all-cash bid for large chunks of 21st Century Fox, valued at about $65 billion, trumping The Walt Disney Co.'s deal that was originally valued at $52.4 billion deal for the same parts of the conglomerate controlled by the Murdoch family.

Comcast says its bid is 19 percent higher than Disney's, which would have put it at $62.4 billion, though Disney's bid involved stock, which means the price it offered has risen a bit as Disney shares trended a bit higher.

Analysts had said that Tuesday afternoon's court decision allowing telecom giant AT&T to acquire Time Warner was making a Fox bid from the cable giant, which owns NBCUniversal, likely. The bid disclosed on Wednesday is for $35 per share.

The formal bid is expected to lead to a bidding war with Disney. Under their deal, Fox has to share any superior bid with Disney and give it at least five business days to sweeten its offer.

Wall Street expects Disney chairman and CEO Bob Iger will not throw in the towel easily. "Disney is in a strong position to compete with a higher bid from Comcast," said MoffettNathanson analyst Michael Nathanson in a recent report.

Comcast had in December bowed out of the bidding process just before Fox accepted the Disney deal, which included the 20th Century Fox movie and TV studio, and all the international pay TV properties including its stake in Sky, as well as a number of other assets.

Comcast's bid back then was higher at around $60 billion, but Fox went with Disney's offer amid concerns that the Comcast deal would face more antitrust issues. On May 23, though, Comcast publicly confirmed that it was preparing a "superior" offer for the same parts of the Fox empire.

Fox executive co-chairman Lachlan Murdoch said on the company's recent earnings call when asked about a potential Comcast bid: "We are committed to our agreement with Disney and are working through the conditions to bring it to a closing. In addition, our directors, though, of course are aware of their fiduciary duties on behalf of all shareholders."

Fox said Wednesday that it "will carefully review and consider the Comcast proposal" and that it would either postpone or adjourn a July 10 special meeting where stockholders were to discuss the deal with Disney.

Comcast chairman and CEO Brian Roberts had said earlier this year that the company would only bid for assets that would make financial and strategic sense to buy.

Read the letter that Roberts sent to Rupert, James and Lachlan Murdoch, below. 

Dear Rupert, Lachlan and James,

We have long admired what the Murdoch family has built at Twenty-First Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.

So, we were disappointed when 21CF decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price. We have reviewed the publicly available terms of the proposed Disney transaction, as well as the joint proxy statement/prospectus filed with the SEC describing the reasons for the 21CF Board of Directors’ decision. In light of yesterday’s decision in the AT&T/Time Warner case, the limited time prior to your shareholders’ meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.

Our new proposal offers 21CF shareholders $35.00 per share in cash and 100% of the shares of New Fox after giving effect to its proposed spinoff, providing superior and more certain value as compared to Disney’s all-stock offer. Our proposal represents a premium of approximately 19% to the value of Disney’s offer as of noon today. We are highly confident in our ability to finance the transaction, and our offer includes no financing-related conditions. 

We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction. Accordingly, we are offering the same regulatory commitments as the ones 21CF has already obtained from Disney, including the same $2.5 billion reverse termination fee agreed to by Disney. To further evidence our commitment, we also are offering to reimburse the $1.525 billion break-up fee to be paid by you to Disney, for a total cost to Comcast of $4.025 billion, in the highly unlikely scenario that our transaction does not close because we fail to obtain all necessary regulatory approvals.

We welcome the opportunity to discuss the regulatory issues presented by each deal. We note that there should not be any meaningful difference in the timing of the U.S. antitrust review between a Comcast and Disney transaction. We have made our HSR filing today, which formally begins our regulatory review at the DOJ. In addition, we have already submitted a large volume of documents and data to the DOJ in connection with its review of the Disney transaction. This information largely overlaps with the information that the DOJ will need to review a Comcast transaction. As a result, our transaction should be reviewable by the DOJ in the same cycle as Disney’s transaction. We similarly expect that our transaction should be reviewable by international regulators in as timely a manner as the Disney transaction, and should be as or more likely to receive international approvals, given our relatively small presence outside the U.S.

Our Board of Directors has unanimously approved this proposal, and no Comcast shareholder vote will be required for this transaction.

Because of your decision to schedule the vote on the Disney merger proposal for July 10, time is of the essence for your consideration of our proposal. We are available to meet at any time to answer questions of the Board, management or your advisors, so that you are in a position to validate the superiority of our offer, and negotiate and enter into a merger agreement, as soon as possible thereafter. Given the very short time frame, today we are filing a preliminary proxy statement with the SEC in opposition to the Disney merger proposal, as we have been advised this is necessary to be in a position to be able to communicate with your shareholders directly regarding the votes they are being asked to cast on July 10. We hope this is precautionary only, as we expect to work together to reach an agreement over the next several days.

More detailed information regarding our proposal is attached.

I look forward to our discussions and working with you toward completing this exciting transaction for the Fox shareholders.