Time Warner Flies on Rejected Takeover: Tech Winners & Losers

NEW YORK (TheStreet) –– Time Warner (TWX) shares shot up 18.1% to $83.89 following reports that they had rejected a buyout offer from 21st Century Fox (FOX).

The New York Times reported Wednesday morning that the Rupert Murdoch-led Fox made an $80 billion takeover bid in recent weeks, but was turned down. Time Warner confirmed the news, saying in a statement that Twenty-first Century Fox offered 1.531 of its Class A non-voting common shares and $32.42 in cash for every Time Warner share. According to the Times’ sources, the process began in early June, when Chase Carey, the president of 21st Century Fox and a longtime Murdoch deputy, met privately with Time Warner CEO Jeff Bewkes.

Had the merger gone through, the combined companies would have a revenue of $65 billion, dwarfing Viacom’s (VIAB) 2013 revenue of $13.8 billion and Disney’s (DIS) $45 billion. If combined, they would also own Fox, Fox News, FX, TNT, TBS, HBO, 20th Century Fox, Warner Brothers, and the broadcast rights to a variety of sports including college basketball, the NBA, and the MLB. The Times’ sources said that had the merger been successful, 21st Century Fox would have sold CNN to avoid antitrust concerns with Fox News.

Time Warner Skyrockets as 21st Century Fox Confirms Rejected Bid

Yahoo! Deal With Alibaba May Be Sign of Stability

Time Warner’s board, “after consultation with its financial and legal advisors, determined that it was not in the best interests of Time Warner or its stockholders to accept the proposal or to pursue any discussions with Twenty-First Century Fox,” according to a statement. “The Board is confident that continuing to execute its strategic plan will create significantly more value for the Company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer."

21st Century Fox confirmed the offer publicly, following the reports. “21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies,” the company said in its own statement. “The Time Warner Board of Directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.”

21st Century Fox shares fell 4.8% to $33.52.

Shares of Yahoo! (YHOO) tanked 4.6% to $33.98 following disappointing quarterly earnings.

Yahoo! reported $1.08 billion in sales, down 3% year-over-year and below analyst expectations of $1.09 billion. EPS rose 4% year-over-year, to $0.37, but below analyst expectations of $0.38.

Marissa Mayer, who became CEO just under two years ago, acknowledged that the results were dismal. "Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results," Mayer said in a statement. "We need to work faster to ameliorate the negative trends. I believe we can and will do better moving forward."

"Clearly we need to operate with an even greater sense of urgency," CFO Ken Goldman added during the conference call.

Yahoo! also announced it had reached an agreement with Alibaba which will allow Yahoo! to sell fewer shares in the upcoming Alibaba initial public offering than the two companies had previously agreed upon—140 million rather than 208 million.

IBM (IBM) shares rose 2.4% to $192.99 after announcing a partnership with Apple (AAPL).

On Tuesday, Apple signed an exclusive deal with IBM focused on bringing business apps and data analytics to the mobile market. The two companies will work together to create IBM MobileFirst for iOS Solutions, which will include "made-for-business apps” for iPads and iPhones in many sectors, including retail, healthcare, banking, travel and transportation, telecommunications, and insurance. IBM’s cloud services will also be optimized for iOS, and the companies will launch a new AppleCare service aimed specifically at enterprise customers.

“iPhone and iPad are the best mobile devices in the world and have transformed the way people work with over 98 percent of the Fortune 500 and over 92 percent of the Global 500 using iOS devices in their business today,” said Apple CEO Tim Cook in a press release. “For the first time ever we’re putting IBM’s renowned big data analytics at iOS users’ fingertips, which opens up a large market opportunity for Apple. This is a radical step for enterprise and something that only Apple and IBM can deliver.”

“Mobility—combined with the phenomena of data and cloud—is transforming business and our industry in historic ways, allowing people to re-imagine work, industries and professions,” IBM CEO Ginni Rometty said in the statement. “This alliance with Apple will build on our momentum in bringing these innovations to our clients globally, and leverages IBM’s leadership in analytics, cloud, software and services.”

Apple shares made modest gains, rising 1.1% to $96.40 in Wednesday trading.

Intel (INTC) shares jumped 7.4% to $34.04 after posting second-quarter earnings that far exceeded analyst expectations.

Intel, the largest chipmaker in the world, reported revenues of $13.83 billion and 55 cents a share in earnings. Analysts polled by Thomson Reuters expected $13.7 billion in revenue and 52 cents a share. Intel’s gross margins were 64.5%, at the high end of company forecasts. In June, Intel predicted revenues of $13.7 billion (plus or minus $300 million) and gross margins of 64%.

“Our second-quarter results showed the strength of our strategy to extend the reach of Intel technology from the data center to PCs to the Internet of Things,” said Intel CEO Brian Krzanich in a statement. CFO and executive vice president Stacy J. Smith added, “This change in our capital structure is the continuation of a multi-year focus on creating value and returning cash to our shareholders, and reinforces our confidence in the business.”

In response to these results, several analysts upgraded the Santa Clara-based Intel, with many raising price targets as well.

UBS (UBS) raised Intel’s rating to “buy” from “neutral” and raised its price target to $37.50 from $30. Piper Jaffray maintained its “overweight” rating, raising its price target to $37 from $31. Jefferies maintained its “buy” rating and raised its price target to $45 from $40. Deutsche Bank (DB) maintained its “buy” rating and raised its price target to $40 from $35.

--Written by Laura Berman in New York

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