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Rosenblatt: Comcast Challenge For Fox Assets Could Reduce Arbitrage Discount

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Rosenblatt: Comcast Challenge For Fox Assets Could Reduce Arbitrage Discount

By some accounts, Twenty-First Century Fox Inc (NASDAQ: FOXA) is, well, foxy. The company could still be the apple of more than one acquirer’s eye, according to Rosenblatt Securities.

The Rating

Rosenblatt Securities analyst Alan Gould reiterated a Buy rating on Fox with a $43 price target.

The Thesis

Walt Disney Co (NYSE: DIS) offered Fox $40 per share for a strong portion of the company’s media assets, and while talk of a Comcast Corporation (NASDAQ: CMCSA) challenge has simmered, Rosenblatt thinks it’s still a possibility.

The Wall Street Journal reported that Comcast is considering renewing its bid depending on the timeline of the merger proxy filing and the outcome of the Justice Department’s AT&T Inc. (NYSE: T)-Time Warner Inc (NYSE: TWX) case. Like Disney, Comcast is seen to value Fox’s international platforms and Hulu.

“We don’t know if Comcast will indeed bid, but at a minimum, we would think the prospects of a competitive bid should reduce the arbitrage discount investors are putting on Fox,” Gould said in a Monday note. 

A $46-per-share bid from Comcast, he said, would lend upside to the current trading value of $36 and prompt a counter-bid from Disney. Should Fox opt for the alternate buyer, it would be required to pay Disney a $1.5-billion break-up fee.

Price Action

At the time of publication, Fox was trading up 1.9 percent around $36.41. 

Related Links:

Could Disney Hold Up The AT&T-Time Warner Deal?

Analyst: Astute Investors Will Take Profits In 21st Century Fox Now

Wall Street Reacts To Disney's Purchase Of Fox's Entertainment Assets

Latest Ratings for FOXA

DateFirmActionFromTo
Nov 2020BMO CapitalMaintainsMarket Perform
Nov 2020Deutsche BankMaintainsBuy
Nov 2020Morgan StanleyMaintainsOverweight

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