Rupert Murdoch’s 21st Century Fox said Tuesday that it has withdrawn its bid for Time Warner, a move that sent the latter’s stock down more than 10% in after-hours trading Aug. 5.
“We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands,” Murdoch said in a statement. “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. Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders. These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer.”
Fox originally made an offer for Time Warner in June for $80 billion. Time Warner said in July that it rejected the bid as too low. Fox’s latest comes the day before Time Warner is scheduled to report its second quarter results.
Time Warner management had argued in the past that it beloieved it would better serve shareholders as a standalone company. In a statement, the company seemed to reiterate that position.
"Time Warner’s Board and management team are committed to enhancing long-term value and we look forward to continuing to deliver substantial and sustainable returns for all stockholders," Time Warner said in a statement. "Time Warner is well positioned for success with our iconic assets, including the world’s leading premium television brand, the world’s strongest ad-supported cable network group, and the world’s largest film and television studio. We thank our stockholders for their continued support."
Time Warner stock fell about 10.9% ($9.38 per share) to $76.15 in after-hours trading Tuesday. The shares had been up significantly since it was revealed that Fox was interested in acquiring the company.
Some analysts had speculated that a Time Warner buy would help 21st Century more than its target. In the statement, Murdoch said Fox is healthier than ever.
“21st Century Fox’s future has never been brighter,” Murdoch said in the statement. “The strength of our leading franchises, combined with the power of our emerging growth businesses and the leadership positions of our international enterprises put us on a path for even greater success.”
Fox’s board of directors also authorized a $6 billion share repurchase program. The repurchase of an additional $6 billion of Class A Common Stock is expected to be completed in the next 12 months.
“This significant return of capital underscores the Company’s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way,” Murdoch said in the statement.