Time Warner fends off Murdoch
Time Warner doesn’t think Rupert Murdoch’s boost to his finances from selling Fox holdings in Sky Italy and Germany will be anywhere near enough to win a bid for TW.
In rejecting an $85-per-share takeover bid by Murdoch’s 21st Century Fox Inc. last week, Time Warner said its own growth plan “is superior to any proposal that 21st Century Fox is in a position to offer.” TW thinks it is worth a minimum of $100 a share and doesn’t think Fox can afford that without ruining it credit rating or diluting its stockholders. Each dollar per share that Murdoch raises his bid costs almost $1 billion.
Time Warner also wouldn’t sell to Murdoch without first running a broad auction process to see if there are other bidders, said American press reports with Verizon the top candidate.
Time Warner’s board this week changed its by-laws to eliminate the right of shareholders to call a special meeting. That move delays any effort by Fox to replace the company’s board until the next annual meeting, which is typically held in June. Time Warner is also weighing whether to adopt a poison pill.
Recent stock fluctuations have left Time Warner and Fox with an almost identical market values of $74.1 billion and $74.8 billion, respectively. Options traders are buying up protection against a potential drop in Time Warner stock, wary of risks that include the board’s resistance to a merger and potential antitrust issues.