All clear for Murdoch to buy ConsMedia

No Murdoch-Stokes bidding war for ConsMedia

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A potential bidding war by Kerry Stokes for Consolidated Media (ConsMedia) (ASX: CMH) appears unlikely to emerge, with fellow billionaire Rupert Murdoch securing a $3.45 per share deal.

News Corporation's (ASX: NWS) takeover of ConsMedia will increase its interest in pay television operator Foxtel from 25% to 50%, leaving Telstra Corporation (ASX: TLS) holding the remaining half.

With James Packer busy negotiating to expand casino operator Crown Ltd (ASX: CWN) into the Sydney market, ConsMedia — the last remaining Packer family media asset — is being cashed in. There is some market chatter that this cash could be used to attempt a tie-up with Star Casino owner Echo Entertainment (ASX: EGP).

Through his investment vehicle, Seven Group (ASX:SVW), Kerry Stokes has a 25% interest in ConsMedia and a significant shareholding in media company Seven West Media (ASX: SWM). Given the structural issues facing free-to-air television and newspaper and magazine publishing, there were obviously reasons for Stokes to diversify into pay television.

However, investors who bought into ConsMedia on the expectation of a higher offer emerging from Stokes have not been rewarded. In fact, the original non-binding offer price from News Corp of $3.50 has actually being reduced to $3.45, although a 6 cent dividend has been declared.

Investing in takeover situations is fraught with difficulties and rarely a sure thing. Careful analysis needs to be made before purchasing a company on the expectation of a higher offer emerging. While Packer may be getting cashed up for a tilt at Echo Entertainment, apart from all the regulatory issues surrounding such a move, ultimately outsiders just don't know what Packer will do. This makes a purchase of Echo shares based on the potential for a takeover, a speculation rather than an investment.

Alternatively, surf wear company Billabong (ASX: BBG) currently has two bidders vying for control, with both private equity firms lodging identically priced bids. A situation such as this could lead to the emergence of a higher offer.

The Foolish bottom line

Allocating a small percentage of your portfolio to takeover situations can boost your overall returns if stocks are intelligently selected, but Fools need to make sure they are acting as investors and not as speculators.

Looking to add a little growth to your portfolio? We've just released our "Top 2 Biotechs To Buy Now." These two companies — each with potential blockbuster drugs in the pipeline — could create untold wealth for early investors. Will you be one of them? Click here for this brand-new FREE report.

More reading

Motley Fool contributor Tim McArthur owns shares in News Corporation. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »