The U.S.-based media and entertainment giant Time Warner Inc. rejected the offer of its competitor 21st Century Fox Inc., which amounted to 80 billion dollars. If the acquisition was finalized, it would have added huge resources such as HBO, TBS, CNN, Turner and Warner Bros to the portfolio of Mr. Murdoch. The combined company would have been even more powerful in the film and TV studio business.
21st Century Fox Inc. made a statement, which was cited by the Guardian, saying: “21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner board of directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.”
According to a person close to the negotiations, Time Warner Inc. said no to the cash-and-stock bid of Mr. Murdochs 21st Century Fox that amounted to 85 dollars per share. If the offer was accepted, it was considered to have been able to create a media giant with total revenues estimated at 65 billion dollars. Such an enormous takeover would surely get close examination from antitrust regulators and would mark a consolidation in the highly-competitive market.
Time Warner Inc. also made a statement explaining its decision to reject the offer. As reported by the Guardian, the company said: “The board is confident that continuing to execute its strategic plan will create significantly more value for the company and its stockholders and is superior to any proposal that 21st Century Fox is in a position to offer. The unique value of Time Warner’s industry-leading businesses including its portfolio of networks and its film studio and television production business is only going to increase.”
Some analysts and observers of the industry have guessed that the merger talks between the two companies are only the beginning of further media market consolidation and it is only a matter of time before a major merger of content providers appears.
Time Warner Inc. jumped 17.07% (the biggest intraday gain since 2000), to close at 83.13 dollars per share yesterday, marking a one-year change of +41.49%. According to the information published on CNN Money, the 25 analysts offering 12-month price forecasts for Time Warner Inc. have a median target of 77.00, with a high estimate of 84.00 and a low estimate of 67.00. The median estimate represents a -7.37% decrease from the last price of 83.13.
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