Disney Investors Worry Beijing Could Be Tricky Fox Deal Hurdle
(Bloomberg) -- Now that 21st Century Fox Inc. shareholders have signed off on the $71.3 billion sale of its entertainment assets to Walt Disney Co., some investors are already fretting about the next hurdle: regulatory clearance from China.
The deal, though already given a green light by the U.S. Department of Justice, still needs antitrust approval from 15 other regulators around the globe. That includes China's State Administration for Market Regulation because a small proportion -- less than 2 percent -- of Fox's revenue is generated in that country.
Some investors are concerned that China might use this deal to retaliate against as much as $500 billion in import tariffs threatened by President Donald Trump, who called Fox co-chairman Rupert Murdoch to congratulate him when the transaction was unveiled in December. White House press secretary Sarah Huckabee Sanders said at the time that Trump thought the deal could be a “great thing for jobs.”
Trump's China Fight Chills Tech Deals With Death of Qualcomm-NXP
That's one reason why Fox shares are trading as though there's about a 20 percent chance the deal will fail, said people with knowledge of the matter who asked not to be identified because they weren't authorized to speak to the media.
“Any deal that needs China's approval could be used as leverage and a strategic tool in a trade war,” Bloomberg Intelligence legal analyst Jennifer Rie said after the Fox shareholder vote Friday.
Qualcomm Inc.'s failure this week to win Chinese approval for its $44 billion takeover of NXP Semiconductors NV increases the risks for any other U.S. companies involved in deals requiring China's approval, according to Rie.
“But I would be surprised if regulators in China tried to do to the same thing to Disney/Fox,” she said. “Unlike the Qualcomm case, it's not credible that there are competition concerns that prevent China's approval. Using antitrust as an excuse would look like a straw man.”
A representative for Fox declined to comment.
“We remain confident that we will be able to close the transaction in the 12-to-18 month period as we previously stated,” a Disney spokeswoman said.
--With assistance from Anousha Sakoui.
To contact the reporters on this story: Nabila Ahmed in New York at nahmed54@bloomberg.net;Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Nick Turner at nturner7@bloomberg.net, Michael Hytha
©2018 Bloomberg L.P.
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
