Wednesday, June 20, 2018

Today’s big pre-market news involves a new bid from The Walt Disney Company DIS to take over assets from 21st Century Fox FOXA, for $38 per share, or $71.3 billion. Reports are the offer would split the payout 50/50 between cash and stock. This outbids Comcast’s CMCSA offer last week to pay $35 per share for Fox assets, all cash.

This deal has been in the making for more than half a year now, with the previous bid from Disney amounting to $28 per share. Seems a pittance now, especially considering that Comcast may come back with an even better offer, perhaps even bringing a new deal into the $40 per share range or higher. “Content is king,” of course, and in the timeless words of Mel Brooks, “It’s good to be the king.”

FOXA shares jumped 6% almost immediately on the news, and after selling off a tad subsequently, has now ratcheted up nearly 8% currently. Year over year, Fox is up roughly 73% — and if a bidding war is indeed in the offing, we’re not done with these increases yet. Disney stock is also up at this hour, about 2.25%, and even Comcast is up by 4 cents right now.

Disney and Fox have a longer relationship in place regarding content development, but no one seems to think this deal is over. Even representatives at Disney — and even after hearing news that Disney CEO Bob Iger and Fox CEP Rupert Murdoch dined together last night, according to CNBC’s David Faber — don’t believe Comcast is finished pursuing these assets. Stay tuned!

Elsewhere, reports that Starbucks SBUX is cutting sales forecasts has sent shares falling more than 3.5% in today’s pre-market. The retail coffee giant is also planning to shutter 150 stores in the next year, in what appears to be a plan to increase comps in existing stores. Starbucks stock is down 7% year over year, and has only met earnings estimates in three of its last four quarters.

Also, Starbucks is one of the companies most often cited as potential collateral in a trade war between the U.S. and China. As China cannot match us tariff for tariff because they import less than 4x the goods from the U.S. than we import from their country, companies that do significant business in China — Yum China YUMC, Apple AAPL and General Motors GM, for instance — may face boycotts or other, shall we say, “anti-growth” measures.

Some potentially good news on global trade" Germany has proposed lifting its 10% EU tariff on autos imported to the U.S. Defenders of President Trump's trade philosophy may point to this and say his method is working. But is Germany expecting anything in return, other than planning to flood the American market with Volkwagens, Audis and Mercedeses"

Mark Vickery
Senior Editor

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