Rosenblatt: Comcast Challenge For Fox Assets Could Reduce Arbitrage Discount

By some accounts, Twenty-First Century Fox Inc 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 DIS offered Fox $40 per share for a strong portion of the company’s media assets, and while talk of a Comcast Corporation 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. T-Time Warner Inc 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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