Rumours of 21st Century Fox Inc’s [FOXA:NSQ] decision to enter into negotiations with Disney [DIS:NYQ] to sell off its entertainment assets stunned the financial markets in very early 2018. By early May 2018 a $52bn all-share (or $66bn including assumed debt) deal to purchase the entertainment assets of Fox was put together by Disney. This would be taken to a vote on July 10th 2018.
Unexpectedly though, Comcast [CMCSA:NSQ] decided to “gatecrash” the deal and on 23rd of May 2018 news broke that they were in advanced talks regarding a rumoured rival $60bn all-cash offer to 21st Century Fox’s shareholders. On the 14th of June Comcast launched a formal $65bn takeover bid for the Fox assets. Comcast own NBCUniversal, and like Disney, could see considerable synergies of the Fox assets with its current media properties. The 10th of July vote was delayed until 27th of July as shareholders digested this news.
Below is an excerpt from the Financial Times Lex Column on 30th of May 2018 that gives an overview of the decisions facing the shareholders of 21st Century Fox:
It has already been a long week for Walt Disney. Between the racist antics of sometime TV star Roseanne Barr and the box office disappointment of Solo, its latest Star Wars instalment, good news has been in short supply. Rupert Murdoch’s 21st Century Fox is about to decide whether it wants to ride such high and lows at the House of Mouse. On Wednesday, Fox announced it would hold a shareholder vote on the proposed combination with Disney on July 10.
Lurking in the background is an expected but not-yet-disclosed bid for Fox’s assets from Comcast — whose entreaties Mr Murdoch has already rejected.
The ostensibly competing offers are tricky to compare. Comcast has lined up as much as $60bn in financing to support its all-cash bid for Fox’s entertainment assets. Disney’s all-stock offer is currently worth just over $50bn. The gap is misleading because Comcast is offering to cash out Fox shareholders by paying them upfront for transaction synergies.
With Disney, Fox shareholders get to share in any future prosperity. Yet this does not represent pure upside. The Mouse reported a good first quarter but its shares are already down a tenth in 2018 over worries about the viability of legacy media. Shares in rival Netflix are up 74 per cent this year. The streaming service’s market value of $150bn has zoomed past Disney’s even as its forecast 2018 revenue is just a quarter that of the Magic Kingdom.
Adding to the complexity is that activist investment fund TCI in late April 2018, on rumours of a possible rival Comcast bid, acquired a 4% stake in 21st Century Fox which it later increased to 7.4%. In late May the FT reported that Sir Christopher Hohn, the activist investor behind TCI, sent a letter to the board of 21st Century Fox urging them to not be swayed by the considerations of a single shareholder and reminding them of their fiduciary duties to get the best deal possible for all shareholders:
“We are aware that the Murdoch family has a potential conflict of interest because of capital gains tax, which could lead them to preferring a lower priced Disney stock offer, to a higher priced offer from Comcast. However, the personal tax position of the Murdoch family must be an irrelevant consideration for the board, in order for the board to comply with their fiduciary duties. It is imperative that the 21st Century Fox board runs a fair auction?.?.?.?and sells it to the highest bidder”
In an academic essay format, you are to consider the competing bids between Disney and Comcast to acquire the assets of 21st Century Fox. Financial Times news articles regarding the acquisition can be found below to support students:
Specifically, you are to choose two of the following three tasks and write a single academic essay that addresses both of the tasks selected (50 marks).
1. You are required to critically evaluate the academic literature regarding the success or failure of merger and acquisition activity and conclude with an informed judgement as to whether the evidence from the literature would suggest that shareholders of 21st Century Fox should welcome or be wary of the two competing bids for their company. You are in your conclusion to come to a specific recommendation of how you would advise a shareholder to vote in the 27th of July 2018 shareholder meeting. Your answer should only use information that was available up until the date of the July 27th vote.
2. You are required to come to a judgement regarding the ability of managers to judge the value of another company when engaging in acquisition activity. Your answer should specifically show an engagement with the academic literature regarding both the efficiency of the stock market and share valuation. Your answer should include an evaluation of the decision of either Disney or Comcast to value their bids at the respective amounts, specifically discussing the difficulties in placing asset price values on the creative assets that they are attempting to purchase. Your answer should conclude with a judgement of the risks involved for either Disney or Comcast in accurately pricing these assets in this fast-moving entertainment based industry.
3. You are required to critically discuss the impact of cost of capital & capital structure on the ability of companies to generate acceptable returns for shareholders. Your answer should display a thorough and extensive engagement with appropriate academic literature and come to an informed judgement regarding the overall impact of capital structure on the ability to generate wealth. Your answer should specifically examine the impacts on either Disney or Comcast’s shareholders of the structure and value of their respective companies (and shares). In your answer you should assume that Disney’s offer is an all share offer financed solely through issuing new shares, and Comcast’s cash offer is financed through entirely new debt issuance. You come to a conclusion as to impact of a possible post-deal cost of capital & capital structure upon the ability of either Disney or Comcast to generate acceptable returns for shareholders.
Investigation of Marxist Critiques of Liberal Capitalism Disclaimer: This work has been put together by an understudy. This isn’t a case of the work composed by our expert scholarly authors. You can see tests of our expert work here. Any assessments, discoveries, ends or suggestions communicated in this material are those of the writers and don’t really mirror the perspectives of UK Essays. Distributed: Fri, 05 Jan 2018 The standard reiteration of Marxist investigates of liberal free enterprise depend on a typical subject which assumes that private enterprise is in a general sense imperfect and abhorrence since it depends on a structure of abuse, i.e., the bourgeoisie, the individuals who claim the methods for creation, mercilessly misuse the low class, the people who offer their work and don’t possess the methods for generation. Marx accepted, basically, that industrialist realms are based on the backs of the low class, who receive insufficient benefits for their work. He guessed that the fundamental distinction between the different monetary types of society, between, for example, a general public in light of slave-work, and one situated in wage-work, lies just in the mode in which this surplus work is for each situation extricated from the genuine maker, the worker. (Marx, 1859, p. 209) While good natured and substantial in some ways, Marxists studies for the most part bomb on scholarly, viable, and experimental levels. The primary scholarly disappointment is show in Marx’s own statement, above, which presumes that wage-work is successfully indistinguishable methods for abuse from slave work. This is just valid if the low class filling in as the work have no methods or any expectation of accomplishing possession stake in the work that they do or the associations for whom they take every necessary step. In spite of the fact that it might have been valid in 1859 when he composed it, liberal private enterprise has advanced, especially in the United States, to the condition of an individual-possession society, where openings flourish for people to expect a stake in the work that they do, not simply gather a paycheck for their labor.In Marx’s brain, the main path for specialists to free themselves from this bondage was to all things considered claim the methods for creation. The viability of this scholarly model has so far been a servile disappointment as far as the outcomes when it has been endeavored. On an observational level, the basic truth is that by far most of governments that have been framed utilizing Marxist or Communist hypothesis have themselves had a tendency to be exploitative calamities in contrast with the industrialist social orders over which they were proposed to exhibit moral and monetary prevalence. The Soviet Union, which propelled its Marxist upheaval in 1917 under Vladimir Lenin, turned into an awesome financial and military power, yet unexpectedly did as such just by abusing its low class under the degenerate, oligarchic manage of authoritarian and on account of Stalin, destructive — tyrants who ruled with a mix of an iron clench hand and a tremendous, solidified administration. The Soviet Union fallen under its own weight, a total ideological disappointment, and its part states swung to entrepreneur economies and majority rule types of government. (To be reasonable, a few Soviets, at the season of Lenin’s domination, trusted it was too early to execute Marxist methods of insight, since Marx’s own necessity had not been met — that the nation’s entrepreneur economy had achieved its transformative endpoint.) China, however still a practical country state which employs impressive financial power, has figured out how to keep away from the Soviet Union’s destiny by presenting an extensive number of free-advertise components into its state-controlled economy. Sadly, China shares the previous Soviet Union’s inclination for merciless concealment of individual rights. The main other as of now remaining genuine Marxist/Communist state is North Korea, whose abominable financial conditions, obsessive culture of love for its tyrants, and absence of respect for individual rights, represent themselves. That in 2005 Marxism would have been so missing from the worldwide political guide would have been an awful hit to Marx, as would the way that the main endeavors at executing his methods of insight in their most perfect structures have prompted fierce, authoritarian administrations which have ostensibly slighted the working class as intensely as any unregulated entrepreneur economy. On a political level, Marx may have likewise disparaged the intensity of the marriage of just types of government to liberal entrepreneur frameworks. In principle, in any event, agent majority rule governments are characteristically organized to engage the working class by giving them participatory voice in the basic leadership that goes into administering the monetary frameworks of their country. Popular government, as we probably am aware it today and as the pre-famous type of government on the planet, was ostensibly still a generally youthful worldview as Marx was building up his speculations. The supremacy of the ideas of the value and decision of the individual rights, singular opportunities is an inalienably fair thought which both negates the uninvolved community recommended by Marxism and furthermore gives an implicit defend against entrepreneur overabundances when they start to support theocracies over individual rights. Popular government is remarkable in its capacity to decrease enhance the harsher impacts of unregulated market private enterprise. At the point when aggressive markets are permitted to thrive unchecked, positively extraordinary riches is made, yet Marx’s investigates of abuse end up legitimate as restraining infrastructures and theocracies jump up to interfere with rivalry and make a domain in which the low class neglect to profit by the work they have put in the interest of, for instance, organizations. Nonetheless, agent vote based system has endured the revulsions of untempered market cycles and responded likewise. Outstanding amongst other precedents is the American Great Depression, in which an abrupt securities exchange crash in October 1929 set off a financial chain response that left a huge number of Americans jobless and in starvation. The aggregate uproar and cries of the low class provoked the chose government to take genuine restorative measures throughout the following couple of decades to accommodate intends to temper the natural blast and bust cycles of free market private enterprise, and to make a social security net for poor people and the elderly (e.g. Government disability, ensuring retirement salary to senior natives). Thus, in Europe, nations where the scourges of free market industrialism once attacked the wide open, for example, England, fair frameworks of government have bit by bit slid their economies into communist cross breeds, advertise economies with extensive components of state control and welfare frameworks to guarantee the low class are all around thought about. Sadly, Marx either was not able see the potential estimation of these future crossover frameworks, for example, showcase communism, with their capacity to make up for imbalances, or basically declined to have confidence in their reasonability since they neglected to coordinate his strident interest for optimistic virtue inside human interrelations: Even if such uncalled for disparities were wiped out, Marx would in any case protest the nature of market social relations since they would keep on being predicated on a sort of selfish pride in opposition to the prerequisite of a genuine network. (Warren, 1998) On a mental level, Marxist scrutinizes of liberal private enterprise additionally fizzle since they need down to earth understanding into how the human mind works and rather depend too intensely on idealistic goals of individuals working optimistically on an aggregate level. Marx’s hypothesis of human instinct is an organic dream, and we have the bodies to demonstrate it. Which may drive us to ponder: if socialism is lethal on the grounds that it is in opposition to human instinct, does that suggest that private enterprise, which is in opposition to socialism, is unmistakably perfect with human instinct? (Wilkinson, 2005) The reality of the situation is that individuals are a progressively slanted animal varieties that blossom with power and rivalry. Left unchecked, these driving forces can result in horrendous, fratricidal conduct, yet when bridled and legitimately diverted, these motivations shape the core of the free market economy, which blossoms with individual activity, sound rivalry, and the journey for personal development and administration. The mental spine of Marxist study is the supposition of an interminable condition of victimhood with respect to the abused, which neglects to consider the intrinsic human propensity to oppose persecution and change existing frameworks into more libertarian structures. As such, Marxist-style upsets may well be superfluous, as the working class appears to every now and again discover routes inside entrepreneur frameworks to state their rights. Individuals will dependably have their seeker gatherer driving forces, yet this does not mean they are foreordained to be malicious: There is no real way to stop predominance looking for conduct. We may trust just to channel it to non-unsafe employments. A free society accordingly necessitates that places of predominance and status be generally accessible in a large number of beneficial chains of command, and that open doors for more prominent status and strength through predation are restricted by the consistent carefulness of “the people”the extreme switch strength order. A prospering common society allows nearly everybody to be the pioneer of something, regardless of whether the neighborhood Star Trek fan club or the city chamber, along these lines fairly fulfilling the human taste for various leveled status, however to nobody’s not kidding impairment. (Wilkinson, 2005) At last, Marxism is an on a very basic level cynical and hypercritical logic, just like its scrutinizes of liberal free enterprise, which is an in a general sense idealistic and individualistic reasoning which blesses every individual with both the obligation and the ability to accept control of his or her own predetermination and individual satisfaction. As humanist Ellen Huang notes, under the focal point of basic Marxist speculations, disparity det>