Time Warner’s stock tanked 10% on the news.
Fox’s stock, meanwhile, jumped about 7%.
Time Warner’s stock is still trading well above the level it was trading immediately prior to the moment news of Fox’s offer leaked ($71).
This suggests that some traders think Mr. Murdoch will be back.
Not so, says one insider familiar with the situation.
“That’s it. Game over,” the insider says.
The insider says two things caused Murdoch to pull his bid:
1) the “entrenchment” of Time Warner’s board and management, who refused to even discuss the offer, and
2) the significant drop in Fox’s stock after news of the offer leaked.
The overture for Time Warner was about creating value for Fox shareholders, the insider said, not destroying it. And given the reaction of the Fox stock price to the news, Fox has decided that it can create more value for shareholders by buying back its own stock and executing its own plan than by chasing after Time Warner.
So does that mean that a Fox-Time Warner deal is off the table forever?
Now that Mr. Murdoch has dangled a huge windfall in front of Time Warner shareholders, only to take it away, one imagines that some of those shareholders may soon be venting their frustration to Time Warner’s board and management. Mr. Murdoch, meanwhile, has demonstrated to his own shareholders that he’s not going to go pay anything just to get his hands on Time Warner — an example that will likely be remembered if and when Mr. Murdoch makes another offer. So if Fox were able to boost its own stock price and generate more cash over the coming months and quarters?
Never say never.
SEE ALSO: Fox Pulls Offer, Time Warner Stock Tanks
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