Disney’s deal to buy 20th Century Fox

In a call with investors following Disney's acquisition of 21st Century Fox, Iger addressed the future of Deadpool, Ryan Reynolds' raunchy and lucrative R-rated Marvel franchise at Fox.

"It [Deadpool] clearly has been and will be Marvel branded. But we think there might be an opportunity for a Marvel-R brand for something like Deadpool," said Iger. "As long as we let the audiences know what's coming, we think we can manage that fine."

Disney Fox acquisition solidified with $71.4 billion deal



The Walt Disney Company today announced that it has signed an amended acquisition agreement with 21st Century Fox for $71.3 Billion ($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. This news comes after Comcast made an aggressive $65 billion all-cash offer last week for the 21st Century Fox assets, forcing Disney to increase its initial $52.4 billion purchase for the Fox acquisition.

For movie fans, as of now this means that presumed plans to reintegrate characters like Fantastic Four and X-Men (including Deadpool) into Disney’s Marvel Cinematic Universe remain intact, as does the total acquisition of Fox’s distribution rights to the original 1977 Star Wars for Lucasfilm. Disney will also now control the rights to such current Fox cinematic franchises as Avatar, Planet of the Apes, Alien, Predator, Die Hard, Kingsman, Ice Age and Night at the Museum. On the TV side some titles they will control include The Simpsons, Family Guy, Legion, American Horror Story, The Orville, NBC’s This Is Us and ABC’s Modern Family. In 2017, Disney’s Buena Vista held a dominant 21.8% of the movie market share, while 20th Century Fox held 12%

“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,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “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 personalized and compelling entertainment experiences to meet growing consumer demand around the world.”


Transaction Details

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.

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 (DTC) 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.

Disney believes the transaction has a clear and timely path to regulatory approval. Both companies have spent the past six months working toward meeting all conditions necessary for closing. In the amended agreement, Disney has increased the scope of its commitment to take actions required to secure regulatory approval.

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. Both companies had been scheduled to hold shareholder meetings on the previously announced transaction on July 10. In light of the amended agreement, the companies are required to prepare updated SEC filings and proxy materials which will be sent to shareholders. A new date for the shareholder meetings will be announced.

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