- Disney agreed to buy most of 21st Century Fox’s entertainment assets for $38 per share, valuing equity at about $71.3B (about $85.1B including assumed debt).
- Consideration was roughly 50% cash and 50% Disney stock, with proration and a share-price collar to manage Disney stock volatility.
- Regulators approved the deal with conditions, led by the U.S. DOJ requiring divestiture of Fox’s Regional Sports Networks.
- Disney projected EPS accretion by the second full fiscal year after closing and at least $2B of cost synergies by 2021.
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On June 20, 2018, Disney and 21st Century Fox entered into an Amended and Restated Merger Agreement whereby Disney agreed to acquire long-listed Fox entertainment assets—excluding “New Fox” broadcast, news, sports and other specified divisions—for $38 per share, combining cash and stock consideration in approximately equal proportions. The equity value of the transaction stood at ~$71.3 billion, with a total transaction value of ~$85.1 billion once $13.8 billion in assumed net debt was included.
Deal structure matters: Shareholders of Fox were given the option of cash or Disney shares, subject to proration; the stock component featured a collar ensuring that Fox shareholders receive a fixed value of $38/share if Disney’s share price at closing falls within a band ($93.53-$114.32), with adjustments if outside those bounds. This structure managed risk on price volatility and aligned incentives, while enabling capital structure flexibility for Disney.
Regulatory hurdles and conditions: The U.S. Department of Justice’s antitrust clearance came with a requirement that Disney sell Fox’s Regional Sports Networks (RSNs) to avoid dominance over sports content alongside ESPN. Key approvals were also obtained in the European Union, India, Mexico and China; in many cases, approvals were conditional on divestitures or operational restrictions. The spin-off of the New Fox entity (holding excluded assets) was structured to comply with regulatory and tax regimes.
Financial implications: The deal was expected to be earnings accretive to Disney by the second full fiscal year post-closing (excluding purchase accounting effects), with US$2 billion in cost synergies anticipated by 2021, largely from overlapping operations and scale efficiencies. The offer also represented a bid defense in a competitive set-up: Comcast had lodged a rival bid, prompting Disney to improve its terms.
Strategic implications and risks: Strategically, Disney acquired major creative studios (20th Century Fox, FX, National Geographic, Star India) expanding its content library and global reach, and strengthened its direct-to-consumer streaming positioning including a controlling stake in Hulu. Risks include integration execution, regulatory compliance, achieving projected synergies, and handling the spin-off of excluded assets under the New Fox entity. Open questions included the long-term impact on competition in sports content and whether the divestitures required would materially reduce the upside.
Execution timeline: The amended deal was approved by both companies’ boards immediately on June 20, 2018; shareholder votes followed on July 27, 2018. The acquisition finally closed in March 2019, after satisfying regulatory conditions in the U.S. and abroad.
Supporting Notes
- Disney raised its offer to $38 per share, up from ~$28 per share under the original stock-only proposal in December 2017.
- The acquisition was structured as roughly 50% cash (≈US$35.7 billion) and 50% stock, with about 343 million new shares issued—Fox shareholders owning ~19% of Disney on a pro forma basis.
- A stock price collar to ensure fair value: between $93.53 and $114.32; with adjustment ratios (0.3324 or 0.4063 Disney shares per Fox share) if Disney stock closes outside that band.
- Total transaction value including $13.8 billion net debt: ~$85.1 billion; equity value ~$71.3 billion.
- Regulatory clearance from U.S. DOJ required Disney to divest Fox’s 22 regional sports networks (RSNs) to avoid market power over sports programming distribution.
- Expected accretion to Disney’s earnings per share by the second fiscal year post-closing (excluding purchase accounting); cost synergies projected at least US$2 billion by 2021.
- Approval by shareholders of both 21CF and Disney occurred on July 27, 2018. U.S.‐DOJ clearance came on June 27, 2018; key international approvals followed in late 2018 and early 2019.
- The spin-off of “New Fox” assets and a dividend from New Fox to Fox shareholders (~US$8.5 billion) was part of the transaction protocol to address tax liabilities arising from the separation.