Before TWX Spurned Fox: 3 Mega-Mergers That Almost Were

Earns Walt Disney
Reed Saxon/AP
Big corporate mergers have been a fact of business life for many years.

This summer, one such high-level combination was almost born when media powerhouse 21st Century Fox (FOXA) made a bid for longtime rival Time Warner (TWX). But Time Warner's board turned down the $85-a-share cash and stock offer (valuing its target at roughly $80 billion), and Fox unceremoniously abandoned the attempt.

That was hardly the first would-be multibillion dollar tie-up attempt that failed. Here's a look at three other prominent deals that never reached consummation.

Comcast/Walt Disney (2004)

Years before Walt Disney (DIS) evolved into a powerful conglomerate owning world-beating intellectual property like Marvel Comics and the "Star Wars" saga, it was a troubled company distracted by a cutthroat battle over the leadership of its board of directors.

Cable TV provider Comcast (CMCSA) made an attempt to win the Mouse in those dark days of 2004. Initially, Comcast approached the focus of that power struggle, then-CEO and board chairman Michael Eisner, with an offer to begin merger negotiations. According to Comcast, though, he was unwilling to discuss such a tie-up.

Undaunted, the cable purveyor directly approached Disney's board with a buyout bid valued at around $66 billion. That attempt was also rebuffed; the board unanimously voted against it because the bid was too low.

Today's aftermath: Disney is currently coming off a quarter that saw its net income soar, with all divisions of the company turning in a bottom-line profit.

In 2009, Comcast went after NBCUniversal, making an ultimately successful bid to grab a majority stake in the broadcaster. It initially took a 51 percent stake in the firm, operating it as a joint venture with General Electric (GE) until it bought out its partner in early 2013.

Today, Comcast is the sole owner of NBCUniversal, and its anchor network -- NBC -- competes directly with Disney's key TV asset, ABC.

Microsoft/Yahoo (2008)

In spite of its success in software, Microsoft (MSFT) has never built a commanding presence on the Internet. In 2008 it attempted to rectify this by offering nearly $45 billion for Yahoo (YHOO), then and now one of the most recognizable names in cyberspace. That shook out to $31 a share, a premium of over 60 percent on the then-current stock price.

That wasn't good enough for Yahoo's top brass, at the time led by founder and CEO Jerry Yang. They took barely over a week to say no, saying that the bid substantially undervalued the company, according to Bloomberg.

Microsoft played hardball, notifying Yahoo that it would take the case directly to shareholders and possibly launch a proxy fight. Again the approach was rejected. Microsoft conceded defeat soon thereafter.

Today's aftermath: There weren't many winners. Yahoo shareholders were deprived of a nice payout, with the shares cratering after Microsoft's exit; they wouldn't hit the $30-plus level until late 2013. Following the Microsoft misadventure, Jerry Yang was out as CEO within a year.

And Microsoft still doesn't have a compelling presence online, in spite of the billions of dollars pumped into assets like its Bing search engine. Its CEO captaining the Yahoo bid, Steve Ballmer, left his position earlier this year.

AT&T/T-Mobile USA (2011)

In 2011 AT&T (T) made a concentrated effort to take over the scrappy rival now known as T-Mobile US (TMUS). In March of that year it offered a $39 billion mix of cash and stock to acquire the firm (then a subsidiary known as T-Mobile USA). This was accepted by its parent Deutsche Telekom (DTEGY).

If successful, the purchase would have made AT&T the largest player in its segment by far, accounting for an estimated 42 percent of all American cellphone service subscribers. But months after the offer was made, the Justice Department filed an antitrust lawsuit in federal court to block the merger.

It's hard to beat the Feds in court, and at the end of that year AT&T formally ended its attempt to buy T-Mobile USA. It was obligated by the terms of its agreement with Deutsche Telekom to pay the German firm a breakup fee of $4 billion in cash and wireless spectrum access.

Today's aftermath: T-Mobile US is still an attractive merger candidate, it seems. Up until several weeks ago, it and Sprint (S) were deep in merger talks before the latter walked away.

Unsuitable Partners?

Since these high-profile bids, none of the three above-mentioned merger targets has been snapped up by a hungry rival. At this point, there's a good chance none will; Disney has a $154 billion market capitalization, Yahoo is worth $38 billion, and T-Mobile weighs in at $24 billion. In other words, they'd make pricey acquisitions no matter how well-funded a potential bidder might be. So, they're likely as good as off the market and -- like Time Warner -- stand as proud, go-it-alone independents ... at least for now.

Motley Fool contributor Eric Volkman owns shares of Walt Disney. The Motley Fool recommends Walt Disney and Yahoo. The Motley Fool owns shares of General Electric Co., Microsoft, Walt Disney and Yahoo. Try any of our Foolish newsletter services free for 30 days.

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