Walt Disney signs amended deal to buy Twenty-First Century Fox for $71.3 billion
Staff Writer |
The Walt Disney Company announced that it has signed an amended acquisition agreement with Twenty-First Century Fox for $38 per share in cash and stock.
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Disney will acquire 21st Century Fox immediately following the spin-off of the businesses comprising “New Fox†as previously announced.
Under the amended agreement, 21st Century Fox shareholders may elect to receive, for each share of 21st Century Fox common stock, $38 in either cash or shares of Disney common stock (subject to adjustment for certain tax liabilities as described in the original acquisition announcement).
The overall mix of consideration paid to 21st Century Fox shareholders will be approximately 50% cash and 50% stock. The stock consideration is subject to a collar and is expected to be tax-free to 21st Century Fox shareholders.
The 21st Century Fox businesses to be acquired by Disney remain the same as under the original agreement. Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements.
Disney is expected to pay a total of approximately $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 collar on the stock consideration will ensure that 21st Century Fox shareholders will receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.
21st Century Fox shareholders will receive an exchange ratio of 0.3324 shares of Disney common stock if the average Disney stock price at closing is above $114.32 and 0.4063 shares of Disney common stock if the average Disney stock price at closing is below $93.53.
Elections of cash and stock will be subject to proration to the extent cash or stock is oversubscribed.
Disney will also assume about $13.8 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $71.3 billion and a total transaction value of approximately $85.1 billion (assuming no tax adjustment).
Disney has secured financing commitments for the cash portion of the acquisition.
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 $2 billion in cost synergies by 2021 from operating efficiencies realized through the combination of businesses.
The amended agreement has been approved by the boards of directors of Disney and 21st Century Fox.
The transaction is subject to approval by Disney and 21st Century Fox shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions. ■