Rupert Murdoch's Fox abandons Time Warner takeover bid

Tue Aug 5, 2014 9:11pm EDT
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By Jennifer Saba and Soyoung Kim

(Reuters) - Rupert Murdoch's Twenty-First Century Fox (FOXA.O: Quote) decided to pull its $80 billion offer to buy Time Warner Inc (TWX.N: Quote) on Tuesday, abandoning plans to create one of the world's largest media conglomerates.

The surprise announcement appeared to cut short what many investors had viewed as an inevitable battle of attrition over a deal that would have joined two of Hollywood's biggest studios and TV networks from TNT to Fox News.

Still, some investors wondered whether the move could be a shrewd effort to drive down the stock, prompting Murdoch to re-enter the fray later on.

"This could easily be part of their negotiating strategy," said Brett Harriss, an analyst with Gabelli & Co, who said Fox could still try again later.

Murdoch, who is Fox's chairman and CEO, cited Time Warner's management and its board's refusal to come to the table to discuss a takeover 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.

He also cited Fox's share price - down about 11 percent since the offer was unveiled on July 16 - saying it had become undervalued, making the deal "unattractive to Fox shareholders."

The news of the collapse of the Fox-Time Warner deal was followed - about three hours later - by the implosion of another deal: Sprint Corp's (S.N: Quote) surprise decision to drop its pursuit of T-Mobile US Inc TMUS.N. It was unclear whether the two cancelled deals presaged any kind of a wider slowdown in what has been a red-hot M&A market in recent months.   Continued...

Rupert Murdoch, executive chairman of News Corporation, reacts during a panel discussion at the B20 meeting of company CEOs in Sydney, in this July 17, 2014 file photo. REUTERS/Jason Reed/Files