Fox to buy Roku for $22 billion

Fox to buy Roku for $22 billion

Fox Corporation said Monday it has reached a definitive agreement to acquire Roku in a cash-and-stock deal valued at roughly $22 billion, or $160 per share.

Why it matters: The combination would create a free streaming powerhouse by combining Roku's free ad-supported channel with Tubi, Fox's free ad-supported service.

  • It also gives Fox access to one of the largest TV operating systems in the U.S., expanding its business further from content to distribution.
  • Roku reaches 100 million households globally.

    • The big picture: The deal reinforces Fox's strategy to focus on live TV content and free ad-supported streaming, Fox executive chair and CEO Lachlan Murdoch said in a statement announcing the deal.

  • "This is a defining moment for FOX, and a natural extension of the deliberate and focused strategy we have been executing for nearly a decade. In 2019, we reoriented the company around live news and sports," he said.
  • "This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile."

    • Zoom in: Upon closing, existing Fox shareholders will own approximately 73% of the combined company, while Roku shareholders will own about 27%.

  • Fox plans to finance the deal through a combination of new debt and cash on hand. The company said it has secured fully committed bridge financing from Morgan Stanley Senior Funding.
  • Fox said the acquisition is expected to be accretive to free cash flow per share by the second full year after closing and generate roughly $400 million in cost synergies.
  • Roku founder, chairman and CEO Anthony Wood will join Fox's board and serve in an ongoing role at the combined company upon completion of the transaction.
  • The transaction has already been unanimously approved by the boards of directors of both firms.

    • Between the lines: The deal offers Roku a lifeline in a competitive market.

  • The streaming giant's growth has been challenged by increased competition, impacting its ability to consistently post profits until last year.

    • What's next: The deal, which is subject to regulatory approval, is expected to close in the first half of calendar year 2027.

    This is breaking news, and this story may be updated.