ValueAct Backs 21st Century Fox's Independence With $1 Billion Position

NEW YORK (TheStreet) -- Jilted prospective acquirer 21st Century Fox (FOXA) is making off quite well following the rejection of its $80 billion offer to Time Warner (TWX). Institutional investor ValueAct Capital has disclosed a $1 billion position in the Rupert Murdoch-run media conglomerate.

ValueAct CEO Jeffrey Ubben said his fund had amassed the stake over the turbulent trading period since Fox initially confirmed its Time Warner offer in mid-July to its retraction of the proposal August 5, wherein shares had tanked more than 11%.

Ubben, speaking with CNBC, noted the firm was “completely in sync” with management’s decision to remain as a standalone business and estimates earnings of at least $2.50 by 2016, profit growth more than 10% higher than what analysts surveyed by Thomson Reuters forecast.

ValueAct stated it intends to be a Fox shareholder over the long term, with no expectation of acquiring board representation.

Time Warner had previously expressed that the offer of non-voting shares (which made up 60% of Fox’s bid) had been a factor in why the company rejected an offer. Murdoch, though, has been reluctant to dilute his family’s 39% controlling interest in the corporation, particularly as he positions son James to succeed him.

Last Wednesday, Fox COO Chase Carey defended the company’s withdrawal of its Time Warner bid.

“This initiative was one of opportunity, not necessity or defensive concerns,” he told analysts in a post-earnings conference call. “We have no plans to pursue any other third-party content company as an alternative to Time Warner. We've created shareholder value at Fox by being an industry leader.”

Gaining for the second consecutive session, shares have settled 0.83% higher to $34.65. The stock has regained nearly 10% since the announcement it had abandoned its Time Warner bid and following a strong fourth quarter, though remains 1.5% lower since news of its proposal broke a month earlier.

A Fox spokesperson has yet to respond to requests for comment.

FOXA ChartFOXA data by YCharts

--Written by Keris Alison Lahiff in New York. 

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