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Comcast Announces $65B Bid For 21st Century Fox Assets, After AT&T-Time Warner Ruling

Comcast launched a bid for the units of 21st Century Fox late Wednesday, offering $65 billion in cash.

The move by the telecommunications conglomerate puts it at loggerheads with the Walt Disney Company, which had already formalized its intentions to acquire the Rupert Murdoch-controlled entertainment giant last year.

Comcast also agreed to offer $2.5 billion reverse termination fee, the same amount that Walt Disney already pledged to offer. In addition, Comcast agreed to offer a break-up fee of $1.525 billion that Walt Disney would be required to pay if its deal does not succeed.

The executives of 21st Century Fox rejected an offer of $60 billion from Comcast in December, citing antitrust concerns from the government.

Wednesday’s offer represents a premium of about 19% to the value of Walter Disney’s offer.

Comcast, the largest cable company in the country, plans to buy all of 21st Century Fox businesses (except Fox News) by paying $35 per share.

According to CNBC, this is the largest all-cash buyout deal ever, beating Bayer-Monsanto’s $64 billion merger.

Disney and Comcast believe 21st Century Fox would help them outshine their competitors by providing international reach and material.

Last year, Disney offered $52.4 billion in stock to buy the majority of 21st Century Fox businesses, including Fox's National Geographic Network, regional sports networks, movie studios, Star TV, FX, and stakes in Hulu, Sky, and Endemol Shine Group.

Fox’s television hits include The Simpsons, the X-Men franchise, and original Star Wars movies, among others.

Comcast already has a large film and television business, with subsidiaries, including DreamWorks Animation, Telemundo, NBC and Universal Pictures.

It is seeking to ramp up its entertainment portfolio and global footprint at a time when its video business is facing extreme pressure from online streaming rivals, such as Netflix.

Comcast’s announcement came several hours after a U.S. District Court judge ruled in favor in favor of AT&T-Time Warner $85.4 billion merger.

The executives of Comcast eagerly awaited judge Richard J. Leon’s ruling, before placing their offer for the assets of 21st Century Fox. Sources close to Comcast say the company is confident of getting a deal passed by regulators after the court’s ruling on Tuesday

CEO Brian Roberts sent the following letter to Fox: “We have long admired what the Murdoch family has built at Twenty-First Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them. So, we were disappointed when 21CF decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price,”

Citing Tuesday’s ruling, Roberts wrote, “In light of yesterday's decision in the AT&T/Time Warner case, the limited time prior to your shareholders' meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the Board's stated concerns with our prior proposal.”

Shares of Comcast and Walt Disney ended closed regular trading session at $32.32 and $106.31, respectively. Meanwhile, 21st Century Fox shares climbed $3.12, or 7.70% to close at $43.66.

IMAGE CREDIT