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. 

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