The deal is done. Taking the timeless advice of Beyonce, Disney has put a ring on 21st Century Fox, Inc., purchasing most of the company’s assets for $52.4 billion in stock. Reports that the two companies were negotiating first surfaced earlier this month, and in the spirit of 2017, things spiraled quickly and here we are.
Under the terms of the deal, Disney acquires most of the company, including the Twentieth Century Fox film and television studios, while Fox will spin off its broadcast TV network, Fox News, Fox Business Channel, FS1, FS2, and Big Ten Network into a new company that will remain independent. A press release from Disney says that the company will use its new assets to “to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose.”
The press release also answers questions about which properties will enter the Disney fold, following confusion over whether or not a deal would allow Disney to make Fantastic Four movies and bring the characters from that franchise into the Marvel Cinematic Universe. The answer is yes, as Fantastic Four joins Disney’s stable along with major franchises like Avatar, X-Men, and Deadpool. The properties that originated in Marvel Comics will be “reunited with the Marvel family,” the press release confirms, bring a potential end to a long shadow war between Marvel Chairman and Donald Trump confidant Ike Perlmutter and Fox over the movie rights, and finally opening the door for Marvel to publish a Fantastic Four comic and, as Marvel has already apparently started in anticipation of the deal, stop trying to make The Inhumans happen.
Other films touted by the press release include The Grand Budapest Hotel, Hidden Figures, Gone Girl, The Shape of Water, and The Martian. Television shows include The Simpsons, The Americans, This is Us, and Modern Family, amongst many others. Disney will also now own FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Bob Iger, who as a result of the deal will stay on as Disney CEO until 2021, putting his presidential aspirations on hold. “We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”
“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Fox Chairman Rupert Murdoch, having cashed out big time ahead of Donald Trump‘s inevitable implosion. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”
In the wake of early reports about the deal, some expressed concern that Disney owning every single intellectual property on the planet could be a bad thing, especially considering the company’s history of stealing from the human race by halting the progress of the public domain and lobbying governments to extend copyrights indefinitely. However, Disney assures everyone in its press release that the acquisition will actually benefit consumers. Phew! Thank goodness!
Here’s a bunch of financial and legal mumbo jumbo you can frown at while pondering the fact that Disney has bought Fox:
The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.
Terms of the transaction call for Disney to issue approximately 515 million new shares to 21st Century Fox shareholders, representing approximately a 25% stake in Disney on a pro forma basis. The per share consideration is subject to adjustment for certain tax liabilities arising from the spinoff and other transactions related to the acquisition. The initial exchange ratio of 0.2745 Disney shares for each 21st Century Fox share was set based on an estimate of such tax liabilities to be covered by an $8.5 billion cash dividend to 21st Century Fox from the company to be spun off. The exchange ratio will be adjusted immediately prior to closing of the acquisition based on an updated estimate of such tax liabilities. Such adjustment could increase or decrease the exchange ratio, depending upon whether the final estimate is lower or higher, respectively, than the initial estimate. However, if the final estimate of the tax liabilities is lower than the initial estimate, the first $2 billion of that adjustment will instead be made by net reduction in the amount of the cash dividend to 21st Century Fox from the company to be spun off. The amount of such tax liabilities will depend upon several factors, including tax rates in effect at the time of closing as well as the value of the company to be spun off.
The Boards of Directors of Disney and 21st Century Fox have approved the transaction, which is subject to shareholder approval by 21st Century Fox and Disney 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.