NEW YORK/LONDON (Reuters) - Rupert Murdoch’s Twenty-First Century Fox Inc (FOXA.O) said on Friday it would only consider deals that are “disciplined” and increase shareholder value, a move analysts said signalled the media company does not want to overpay for takeover target Time Warner TWX.N.
Fox is expected to use the $7.2 billion proceeds from its partial exit from Europe’s pay TV market to fuel its pursuit of Time Warner TWX.N, which recently rejected Fox’s initial $80 billion bid. Some investors expect it to return with a higher offer.
Fox announced the sale of its Sky Italian and German pay-TV units to BSkyB in cash and assets on Friday.
Murdoch said in a statement about the Sky deal that Fox’s “number one priority is increasing shareholder value in a disciplined manner” and “we will only consider transactions that fully support this objective.”
Fox is signalling to investors it will not go beyond its financial means to buy Time Warner, said Bernstein research analyst Todd Juenger.
“Fox and Time Warner are now both engaged in posturing. Fox is trying to reassure investors that it will not overpay,” Juenger said.
Fox did not signal it would use the proceeds for a major deal. It said in a statement that the Sky transaction improves the liquidity on its balance sheet and will support its key principles including “the consistent return of capital to shareholders.”
Fox also pledged on Friday to keep up its new share buyback program “regardless of any potential acquisition or investment activity by the company.” It will unveil its new share buyback program on Aug. 6 when it reports its quarterly results.
Reporting by Liana B. Baker in New York and Leila Abboud in Paris; Additional reporting by Kate Holton; Editing by David Holmes and Paul Simao