Fox And Disney Stocks Gain After Chinese Regulators Approve Merger
On an otherwise down day for stocks, 21st Century Fox and Disney shares both posted gains in the early going today after Chinese regulators approved the companies’ landmark merger without conditions.
Fox shares at one point were up more than 3%, though they gave ground to close at $48.91, up 1.6%. Disney’s popped about 1% in the early going, but ended up shedding a fraction to close at $115.42. Broader indices including the Dow, Nasdaq and S&P all slumped badly, putting Fox on a very short list of gainers. The classic M&A dynamic of the seller’s stock rising while the buyer declines also reasserted itself.
A Disney spokesman confirmed the approval in China to Deadline after it was initially reported by CNBC.
The regulatory OK comes after a touch-and-go period over the past few months during which overall trade relations between the U.S. and China hit the rocks. Some observers thought the $71.3 billion sale of studio, network and digital assets to Disney — a deal personally blessed by President Donald Trump — could be stymied by the Chinese as a form of payback.
The prevailing sentiment, though, especially with the European Commission granting its approval this month with certain conditions attached, is that the historic merger is just weeks away from closing.
In reporting quarterly earnings this month, Disney said it expected to close in the first quarter of 2019. Last week, Fox held what it said would likely be its last annual shareholder meeting in its current form. After the deal, it will be called simply “Fox” and consist of the broadcast network, cable networks Fox News, Fox Business, FS1 and FS2, and a portfolio of local TV stations.
Two of the major global regulatory agencies weighing in on the deal — the EC and also the U.S. Department of Justice — have insisted that Disney shed major assets in order to win approval. The company is in the process of divesting of the 22 regional sports networks owned by Fox and its own stake in five unscripted cable networks that are part of A+E, a joint venture with Hearst.