Disney Reaches Deal with Twenty-First Century Fox

The Walt Disney Company (NYSE: DIS) has announced it has reached a deal to acquire most of the assets of Twenty-First Century Fox (NASDAQ: FOXA) in an all-stock transaction worth about $52.4 billion, or $29.54 per share, based on Fox's closing price on Wednesday. After the assumption of approximately $13.7 billion in debt, the total consideration will be roughly $66.1 billion. Disney will issue approximately 515 million new shares to current Fox shareholders, who will have about a 25% stake in the new company. The transaction is estimated to generate $2 billion in cost savings.

The acquisition is largely intended to help Disney compete with online video providers such as Netflix, Apple, Amazon, Google, and Facebook. As part of the deal, Disney is acquiring Fox's stake in Hulu, which will become majority owned by Disney (Disney currently owns 30% of Hulu). Disney is rolling out two other streaming services that "will be considerably cheaper" than Netflix.

Assets not included in the deal are Fox News, the Fox broadcast network, the FS1 sports cable network, and the lot of 20th Century Fox. Rupert Murdoch, the leading shareholder of Fox, will roll those assets out in a newly listed company.

As part of the transaction, Disney Chairman and CEO Bob Iger will extend retirement plans from 2019 to 2021.