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AT&T / Time Warner merger approved - we now enter Thunderdome

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A judge has unconditionally approved the AT&T / Time Warner merger.

Now the fireworks between Disney and Comcast for Fox will begin.


Thunderdome: Two mega companies enter.  One Big Ass Mega company leaves.


Who do you think will win?

Who do you want to win?


Disney is currently offering $52.4 Billion

Word is that Comcast will counter with an all-cash bid around $60 Billion

Grab a box of curry popcorn, cause this is gonna be good.


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Now that the federal judge has all but guaranteed that Fox could be purchased for any dollar value, without a chance of having to defend against anti-monopoly claims, the bidding war may take off.  Regardless of the judge's ruling, any Fox buyout would still need to pass regulatory approval; it's just much less uncertain now.


As expected, Comcast bid $65B in cash - 19% higher than Disney's $52.4B bid, which was an all-stock offer.

But remember, Fox has not responded to the bid yet.

In fact, Fox shareholders will vote on Jul 10 on the Disney bid.

Nothing forces Fox to even entertain the Comcast bid.


So here's what could happen:

Disney could sit still and wait for the Jul 10 vote.  Shareholders could go with the lower Disney bid on the table.  They will NOT be voting on the Comcast bid.  Voters could reject the Disney bid - and then all hell may break loose.

Disney could up the stakes even before Jul 10.  I believe the Jul 10 vote would then be based on the higher bid.

To which Comcast could up their bid, all ahead of the Jul 10 vote.


Here an interesting thing, though: The July 10 vote may not even mention the higher Comcast bid.

Comcast is pleading with Fox to make sure their shareholders know well in advance of the July 10 vote that a higher offer is on the table.  After all, if you are a Fox shareholder and are not following this closely, you get a ballot that says Disney wants to buy Fox.  Disney?  I love Disney!  Sure!  So it is highly important that all voters know what is on the table.  In fact, if Fox did NOT do this and Disney won the vote, I could see Fox shareholders suing Fox because they were not made aware of a better offer.


Disney is expected to match the Comcast offer, but may need to take on tens of billions in debit to do so.

Many analysts are seeing bidding going to $80B or more.  Most expect Disney to win.


If Fox walks away from the Disney deal, it will owe Disney $1.5 Billion as a break-up fee, which is common on these sorts of acquisitions.

Comcast's offer includes reimbursing Fox for that fee to Disney.

Comcast's offer will also pay Fox $2.5 Billion in the event the transaction fails to pass regulatory approval.  Disney's offer promised the same.  That's interesting because Disney promised this while the ATT/Time Warner merger was still under scrutiny, so Disney had a decent chance of having to pay that; here, Comcast and Disney now both have a near zero chance of that happening.






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For those wishing Comcast comes out the winner, this is a bit sobering:


If Comcast was to win a bidding war against Disney for, say $85B, they would become the second-most indebited company (not counting banking companies), just behind the newly combined ATT/Time Warner.

Comcast's total debit would be around $170B, about triple what it is today.


Comcast has had a reputation of being quite conservative when it comes to the amount of debit it owes - they are not seen as reckless.  But this would be a major shift.  Consider that we are in a hot economy, and interest rates are rising.  Moody's (a company that rates the value of companies against risks) downgraded ATT/Time Warner based on the huge amount of debit it now owes.


Were Comcast to win, it's not out of the realm imagination that it could end up choking on its own debit to the point where it would be forced to sell off parts of its portfolio at fire sale prices (maybe to Disney?)


As I read these articles, it sure seems like Disney is ultimately going to be the one buying Fox.


Consider this:

Fox and Disney are already about six months into their deal.  It has passed many internal hurdles.  If they were accept Comcast's offer, that would have to start over.

Analysts say that Fox would prefer a stock offer rather than cash offer, so Comcast may not be as irresistible as one would think.


Fox's board of directors is scheduled to meet Wed 6/20 to discuss the Comcast offer.


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