Time Warner Rejects Twenty-First Century Fox Takeover Bid

(RTTNews) - In response to media reports, media and entertainment giant Time Warner Inc. (TWX) confirmed Wednesday that it has rejected a takeover bid from Rupert Murdoch's 21st Century Fox, Inc. (FOX, FOXA), saying that the proposal was not in the best interests of the company or its stockholders. The company's shares are currently gaining almost 18 percent.

New York-based Time Warner added, it was confident that the execution of its strategic plan will create significant value for the company as well as its stockholders and is superior to any proposal that Twenty-First Century Fox was able to offer.

Time Warner noted that 21st Century Fox offered to acquire all of its outstanding shares for a combination of 1.531 of 21st Century Fox Class A non-voting common shares and $32.42 in cash per share.

Citigroup Global Markets Inc. is acting as financial advisor to Time Warner, while Cravath, Swaine & Moore LLP is acting as its legal advisor.

In a separate statement, New York-based 21st Century Fox confirmed that it had made a formal proposal in June to combine with Time Warner, but noted that the offer was declined by the target company's board. The company added that it was not currently in any talks with Time Warner.

In June 2013, Murdoch split News Corp (NWS, NWSA) into two public companies after concerns from shareholders in response to its recent scandals and to unlock even greater shareholder value.

Murdoch went on to head the more profitable media and entertainment business, 21st Century Fox Inc., while the other company, the new News Corp, held the publication assets and is being led by CEO Robert Thomson.

21st Century Fox's portfolio consists of cable and broadcasting properties, including FOX, National Geographic Channels, STAR, as well as film studio Twentieth Century Fox Film.

The New York Times reported earlier in the day that 21st Century Fox made an $80 billion takeover bid for Time Warner, but was rebuffed. Fox reportedly made an approach in early June and followed it up later with a formal bid worth $85 in stock and cash for each Time Warner share.

The offer, which comprised about 60 percent in stock and 40 percent in cash, reportedly amounted to a nearly 25 percent premium to Time Warner's stock price at that time.

According to the NYT report, Fox estimated that a combination of the two companies would create at least $1 billion in cost savings by eliminating overlapping sales and back-office operations. However, Time Warner sent a letter to Fox in early July, saying it was rejecting the offer.

A combined Fox and Time Warner would have owned an array of television networks and cable channels like Fox, Fox News, FX, TNT and TBS, the premium subscription channel HBO, and movie studios like Twentieth Century Fox as well as Warner Brothers.

A merger would have also combined Fox's sports business with Time Warner's broadcast rights for professional and college basketball, Major League Baseball, soccer and golf. The combined company would reportedly have total revenue of about $65 billion.

Fox is said to have indicated that it was ready to sell Time Warner's CNN to allay potential antitrust concerns, as its own Fox News competing directly with CNN.

According to the NYT report, Murdoch is determined to buy Time Warner and is unlikely to walk away despite being rebuffed. About 70 percent of Time Warner shareholders, including large mutual funds, also own shares in Fox, and Murdoch is counting on the large crossover in the shareholder base of the two companies to work in his favor.

In addition, confirmation of the takeover bid could put pressure on Time Warner Chief Executive Officer Jeff Bewkes from that company's shareholders to engage in talks.

TWX is currently trading at $83.70, up $12.69 or 17.87 percent on a volume of 33.25 million shares.

FOXA is trading at $34.21, down $0.98 or 2.78 percent on a volume of 25.64 million shares.