Published On: Wed, Aug 6th, 2014

‘New and Improved’ Rupert Murdoch Walks Away from Time Warner Deal

Rupert Murdoch

After gunning for Time Warner for months, 21st Century Fox, owned by media mogul Rupert Murdoch, walked away from the deal, which was expected to be a game-changer in media consolidation. Murdoch said the reason the takeover was scrapped was because of Time Warner’s reluctance to “engage with us, ” and that the deal was increasingly “unattractive to shareholders.”

The potential acquirer’s stock had been tumbling while Time Warner’s was climbing since the announced $80 billion bid, which would  have valued Time Warner at $85 a share. When Time Warner refused, there was speculation that the amount of the offer might climb to $90 or $95 a share, amounting to $89 billion.

Time Warner’s reason for refusing the bid lies in management’s confidence that it can grow the company without the need to be taken over. Some said that an offer of $100 a share would have been sufficient, but this was out of Fox’s budget.

Given the decline in Fox’s stock, its offer was also falling in value, down to $80.34 a share on Tuesday. At the same time, since Fox first made its bid, Time Warner’s stock has soared from $70 to $87.35, before settling at $76.85.

Time Warner had held up shareholders’ ability to call a special meeting, which meant that the deal would have been further delayed until next spring. This is another aspect that made the deal less attractive to Fox.

RBC Capital Markets analyst said, “This is a new and improved Rupert Murdoch, who has strategic vision, but is but is better aligned with the interests of public shareholders and is willing to exercise price discipline.”

 

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