Cable provider and NBCUniversal owner Comcast is making a bid for the entertainment company 21st Century Fox.

It has reportedly rounded up $60 billion in cash from various investment banks in order to make the deal happen.

But wait a minute, didn’t Fox agree to merge with entertainment company Disney?

Let’s take a trip back…

Back in December, Disney announced it would acquire numerous divisions of Fox, including its film and television studios, cable entertainment networks and international TV businesses, in a deal worth $52 billion.

So why is Comcast making an end run around Disney to try to capture Fox?

It’s what’s known in the investing world as a hostile bid, or hostile takeover. That’s when one company attempts to buy a company, against the wishes of the executives and board managing that company.

Why is Comcast doing this?

Comcast’s strategy is to offer the Fox’s shareholders a deal that’s more lucrative than the one that was initially proposed. In this case, Comcast is offering an additional $8 billion, which is known as a premium over the original purchase price.

A premium is like a bonus, it’s an amount that’s more than the original price, and it acts as a sweetener for the deal, providing shareholders with more money once the deal goes through.

Weren’t hostile takeovers a big thing in the 1980s?

You remember correctly! In the 1980s, it became popular for certain investors or companies to buy up as many shares of the company it wished to acquire, until it had a majority ownership of the target company.

This tactic is also known as corporate raiding.

The film Wall Street, which features Michael Douglas as the fictional corporate raider Gordon Gekko, who famously said, “greed is good,” put its cultural stamp on the era.

Real life examples of corporate raiders in the 1980s:

  • Investor Carl Icahn is known today as a shareholder activist, but in the 1980s he was also a corporate raider who famously engineered the takeover of the now defunct Trans World Airlines, or TWA.
  • Similarly, T. Boon Pickens struck fear in the heart of corporate boardrooms, in his bid to take over the petroleum giant Gulf Oil.
  • Ronald Perelman engineered the takeover of makeup company Revlon for $1.8 billion in 1986.

How can companies avoid a hostile takeover?

As a way to protect themselves, some companies adopted what is known as a poison pill strategy. That’s when a company attempts to ward off a hostile takeover by giving existing shareholders the option to buy outstanding shares at a steep discount when any one entity buys more than a set percentage of the company’s stock, for example, 15 to 20 percent of outstanding stock.

In contrast, another poison pill arrangement allows shareholders to purchase the shares of the corporate raider’s stock at a deep discount–which makes the deal unattractive to the company looking to acquire the target company, because it can wind up making the acquiring company’s stock less valuable, via a process known as dilution.

So what’s happening with Comcast and Fox now?

The Comcast bid isn’t a done deal yet. In fact, Comcast had tried unsuccessfully to purchase Fox assets in November, according to reports. Shareholders must ultimately agree to the new offer.

Regulators examining the proposed Disney and Fox merger for monopoly implications may also rule against the deal, which would similarly make the Comcast takeover unlikely, on the same grounds.

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