After much back and forth and with Comcast also aggressively vying for Twenty-First Century Fox, it seems like The Walt Disney Company has come out on top. Disney has finally signed an acquisition agreement with Twenty-First Century Fox for US$38 per share in cash and stock.
Disney will acquire 21st Century Fox immediately following the spin-off of the businesses comprising "New Fox" as previously announced. The acquisition price implies a total equity value of approximately US$71.3 billion and a total transaction value of approximately US$85.1 billion, where Disney will also assume about US$13.8 billion of net debt of 21st Century Fox.
The overall mix of consideration paid to 21st Century Fox shareholders will be approximately 50% cash and 50% stock. Disney is expected to pay a total of approximately US$35.7 billion in cash and issue approximately 343 million new shares to 21st Century Fox shareholders, representing about a 19% stake in Disney on a pro forma basis.
The amended transaction is expected to be accretive to Disney earnings per share before the impact of purchase accounting for the second fiscal year after the close of the transaction, and to yield at least US$2 billion in cost synergies by 2021 from operating efficiencies realized through the combination of businesses.
As announced in the original acquisition agreement, the businesses to be acquired by Disney include 21st Century Fox's film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000 Pictures; Fox's television creative units, Twentieth Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Sports Regional Networks; Fox Networks Group International; Star India; and Fox's interests in Hulu, Sky plc, and Tata Sky.
The acquisition will occur immediately after the spin-off by 21st Century Fox of the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company referred to as New Fox. If 21st Century Fox completes its acquisition of the 61% of Sky it doesn't already own prior to closing of the Disney acquisition, Disney would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.
The acquisition will significantly increase Disney's international footprint and expand the content and distribution for its direct-to-consumer offerings, which include ESPN+ for sports fans; a Disney-branded streaming video-on-demand service launching in late 2019 that will feature Disney, Pixar, Marvel and Star Wars films along with a host of exclusive original content and library titles; and its ownership stake in Hulu. As a result of the acquisition, Disney will hold a controlling stake in Hulu.
"The acquisition of 21st Century Fox will bring significant financial value to the shareholders of both companies, and after six months of integration planning we're even more enthusiastic and confident in the strategic fit of the assets and the talent at Fox," Robert A. Iger, chairman and chief executive officer, The Walt Disney Company, said.
"At a time of dynamic change in the entertainment industry, the combination of Disney's and Fox's unparalleled collection of businesses and franchises will allow us to create more appealing high-quality content, expand our direct-to-consumer offerings and international presence, and deliver more personalised and compelling entertainment experiences to meet growing consumer demand around the world."