Murdoch sale of European assets could fund Time Warner bid
A satellite deal in Europe could help Rupert Murdoch build the cash pile he needs to buy Time Warner (TWX).
Murdoch's 21st Century Fox (FOX) agreed to sell its stakes in satellite companies in Italy and Germany to Britian's BSkyB for about $9 billion. The deal could provide 21st Century Fox, which is the largest shareholder of BSkyB, with a way to get the money it needs to make another bid for Time Warner. Last week, Time Warner rejected a $80 billion, or $85 a share, takeover offer from Murdoch’s 21 Century Fox.
Murdoch will get the deal done, said Yahoo Finance’s Jeff Macke. "Never bet against crazy, octogenarian, billionaires who have a penchant for getting what they want, and Rupert certainly fits all of those,” he said. Yahoo Finance Senior Columnist Michael Santoli said Murdoch definitely wants on new toy, but it's not a foregone conclusion he will be able to buy Time Warner.
Reports surfaced this week that the Time Warner board challenged Fox, implying it will not consider anything less than $100 per share. However, Fox is reportedly not willing to offer more than $90-95 per share. Santoli said, “It doesn’t mean that Murdoch, if he decides to pay a stupid price, won't get the company." The questions Santoli posed are: Is he willing to sacrifice the credit rating of the company? Is he willing to overpay? Murdoch may be wary of bidding much over $100 a share, which could mean becoming junk-rated company. This is what scared him in the '80s and '90s, when Murdoch's company was in some financial distress, he said.
Santoli believes Time Warner has options to fend off Murdoch for a while, such as persuading shareholders that they have a plan to get the stock to $110 a share.
Time Warner is also not making it easy for Fox. This week the board changed its bylaws to eliminate the right of shareholders to call a special meeting. The move delays any attempt by Fox to replace the company’s board until the next annual meeting, which is usually in June. “This is basically how you say hello in corporate America, when someone offers to buy your entire company,” Macke said.
Murdoch wants Time Warner because he wants to build a media empire. "It gives him content--it gives him news--and gives him a legacy. The man is all about these kind of things," according to Macke. And to the Time Warner CEO, Macke adds: “Jeff Bewkes, I’m sorry sir, but eventually you’re just going have to take that $80 million dollar golden parachute."
