21st Century Fox notified Time Warner on Tuesday that it was withdrawing its $80 billion offer to acquire the company.  The offer, made on July 16, was immediately rejected by Time Warner based on valuation of the stock used as currency, the price, and concerns about Fox’s ability to manage the combination (see “DC Parent Time Warner in Play”), but that’s what almost every pursued company says initially, including those that end up getting acquired.    

Most observers thought that Murdoch would sweeten his offer and continue his pursuit, but in the announcement today he cited compelling reasons for the withdrawal.  “Time Warner management and its board refused to engage with us to explore an offer which was highly compelling,” the statement said.  “Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders.” 

As is often the case in takeover battles, the value of the acquiring company, Fox, declined, and the value of the target company, Time Warner went up.  Those moves were reversed in after-hours trading on Tuesday.  Fox had declined 11% since the offer was announced, and was back up 8% after it was withdrawn, according to the New York Times.  Time Warner, on the other hand, had gone up 20% from $71 to as high as $88.  It was down 10.6% in after-hours trading. 

Fox also announced a buyback of $6 billion of its own shares, a sign that it was disposing of some of the cash it had accumulated in anticipation of the acquisition. 

As is often the case with mega-deals (and with all deals, for that matter), it appears that personal issues were as much of a barrier to getting a deal done as any business case.  Time Warner’s board and management had responded negatively to the approach, and there were apparently no friendly discussions between 21st Century Fox CEO Rupert Murdoch and Time Warner CEO Jeff Bewkes.  The story may not be over (after all, if Murdoch wanted to be in a better position, he just needed his stock price to go up and Time Warner’s to go down, exactly the outcome from his announcement), but it’s clearly paused for now.