Walt Disney Co. (DIS, Financial) and Twenty-First Century Fox Inc. (FOXA, Financial)(FOX, Financial) announced Dec. 14 the two companies entered a definitive merger agreement for Disney to acquire Fox’s film and television studios for approximately $52.4 billion in stock.
Merger details
According to the press release, the Disney-Fox acquisition will combine Fox’s “critically acclaimed film production businesses,” which includes Fox Searchlight Pictures and Fox 2000. Disney CEO Bob Iger said the acquisition reflects goals to target a global audience and meet strong consumer demand for an eclectic variety of entertainment experiences. The merger with Fox enables Disney to create “rich worlds of inter-related characters and stories” through the addition of various brands, like X-Men, Fantastic Four, Marvel and National Geographic.
Fox CEO Rupert Murdoch said management is “proud of everything we have built at 21st Century Fox” and that the merger with Disney will unlock new shareholder value. Murdoch also praised Iger, mentioning he is committed to success with a team “second to none.” Both boards of directors have approved the merger.
Under the terms of the agreement, Fox shareholders will receive 0.2745 Disney shares for each Fox share owned. Based on this exchange ratio, the acquisition price implies a total transaction value of about $66.1 billion, which includes Fox’s net debt of approximately $13.7 billion. The company warned the exchange ratio may fluctuate based on updates to estimated tax liabilities arising from transactions related to the merger.
The merger is subject to several customary closing conditions, including shareholder approval from both companies, clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvement Act and other global regulatory reviews. Prior to merger completion, Fox will spin off its news, business and sports businesses to create a “newly listed company."
Stock price movements
Disney’s share price increased approximately 0.16% from its previous close of $107.61. Fox’s Class A and Class B shares increased 2.92% and 3.12% from the previous close.
Disclosure: The author has no positions in the stocks mentioned.
