Twenty-First Century Fox withdraws bid for Time Warner
Murdoch, who is Fox’s chairman and CEO, cited Time Warner’s management and its board’s refusal to engage with Fox as one reason for the stunning turnabout.
“Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its board refused to engage with us to explore an offer which was highly compelling,” he said in a statement released after the market closed on Tuesday.
Murdoch also cited the reaction of Fox’s share price since the proposal undervalues its shares and “makes the transaction unattractive to Fox shareholders.” A Time Warner spokesman did not immediately return a request for comment.
Shares of Fox were up 10.4 percent in after-market trade after closing at $31.30. Shares of Time Warner were down 10.7 percent after closing at $85.19.
Brett Harriss an analyst with Gabelli & Co did not believe this was the end of the courtship that was revealed on July 16 by both companies.
“This could easily be part of their negotiating strategy,” he said.
Time Warner’s refusal to engage in negotiations, the drop in its stock price after the announcement and the fact that it barred its shareholders to call a special meeting will all play into the game, he said.
“Those three things will act to put tremendous pressure on Time Warner management,” Harriss said.
Both Fox and Time Warner are set to report their quarterly earnings on Wednesday and executives will likely be on the hook to defend their positions.
Meanwhile, Fox said it was initiating a $6 billion share buy back program to be completed in the next 12 months.
“This significant return of capital underscores the Company`s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way,” Murdoch said in a statement- Reuters