Time Warner Inc (TWX) Rebuffs Buyout Offer From Twenty-First Century Fox Inc (FOXA), What Next?

Time Warner Inc (NYSE:TWX) declined a proposal to be purchased by Twenty-First Century Fox Inc (NASDAQ:FOXA) in a deal that could have created the most powerful media conglomerate in the world.

FOXA made its proposal in June in which it offered to pay about $80 billion or $85 per share of Time Warner. The offer proposed a stock-and-cash transaction of which 60 percent of the acquisition value would be made in stock and the rest in cash. Various experts have weighed in on the matter.

For example, speaking on CNBC‘s Delivering Alpha Conference, Ken Griffin, the manager and CEO of Citadel Investment Group remarked:“I think it is a great deal. Time Warner great assets, HBO, Warner, studios, content is king. Both those assets have great content. The deal makes a lot of sense for Fox. Makes a lot of sense for Time Warner’s shareholders.”

He went on to say: “One of the dynamics Time Warner faces is there is no controlling shareholder, and, therefore, the company is in play, and unless they have a great option for the shareholders, this deal looks like the highest way to a security for value in the shareholders.”

Time Warner Inc (NYSE:TWX) is in the portfolio of various hedge funds, with the top-five holders being Viking Global, managed by Andreas Halvorsen which owns 21.65 million shares, Oz Management, led by Daniel S. Och holding 9.24 million shares. Standing on the third spot is Coatue Management, run by Philippe Laffont holds 4.69 million shares, Mario Gabelli’s Gamco Investors is next which owns 2.48 million shares. On the fifth is Sirios Capital Management, led by John Brennan holding 2.01 million shares.

Twenty-First Century Fox Inc (NASDAQ:FOXA) is also in the portfolio of a number of hedge funds whereby the top-five include Yacktman Asset Management, led by Donald Yacktman which held 58.63 million shares at the end of the first quarter of 2014. On the second spot is Andreas Halvorsen’s Viking Global amassing 37.93 million shares, which was also mentioned as one of Time Warner’s sharheolders. It is followed by Eagle Capital Management, run by Boykin Curry which owns 20.40 million shares. Stephen Mandel’s Lone Pine Capital owns 20.01 million shares and stand fourth on the list.

Given that Murdoch, the billionaire owner of Twenty-First Century Fox Inc (NASDAQ:FOXA), is a tireless negotiator known to always go an extra mile to get what he wants, his past characteristics are likely to replay in the case of Time Warner. As such, a hostile deal cannot be ruled out.

According to analysts, a deal between Twenty-First Century Fox Inc (NASDAQ:FOXA) and Time Warner Inc (NYSE:TWX) would take media consolidation in the U.S. a notch higher, especially now that media companies are focused on global growth.

Disclosure: none