Disney’s $71.3 Billion Acquisition of 21st Century Fox


 

Overview of the deal

  • Acquirer: Walt Disney Company

  • Target: Twenty-First Century Fox, Inc.

  • Estimated value: $52.4bn

  • Announcement date: December 2017

  • Acquirer Advisors: JPMorgan, Guggenheim Partners

  • Target Advisors: Goldman Sachs, Deutsche Bank, Centerview Partners


Walt Disney’s original all-stock offer was to acquire a downsized 21st Century Fox for $52.4bn after Fox spun-off a new entity called “New Fox” constituting their news assets, (television broadcasting), and the national operations of Fox Sports. This would leave Disney with Fox’s entertainment offering, notably its movie studios, and pay-television assets - all with strategic importance to Disney. Through the acquisition Fox’s 30% stake in the television streaming company Hulu, and its 39.14% stake in Sky plc, Europe’s biggest media and telecommunications company, would both be assumed by Disney.


However, a month long bidding war for Fox was sparked in June as Comcast, another American telecommunications conglomerate, made an unsolicited $65bn, all cash, offer to acquire the same Fox assets that Disney had placed their bid for. In response, Disney raised its bid to $71.3bn, restructuring the deal to include $36bn in cash. Subsequently, on July 19th Comcast retracted its bid, and on July 27th Disney and Fox shareholders approved the deal, currently awaiting international regulatory approval. The deal is expected to close early 2019.


The takeover battle comes as traditional media are scrambling to consolidate in the face of competition from streaming players such as Netflix and Amazon, which have deep pockets, massive programming libraries and growing global subscription businesses. The Disney-Fox deal would combine the company behind Avatar, X-Men and The Simpsons with Mickey Mouse, Iron Man and Han Solo, creating an intellectual property powerhouse with international distribution operations such as Star of India.

Company details (Walt Disney Company)

The Walt Disney Company is a multinational media and entertainment conglomerate. It was founded in America as an animation company and has proceeded to assume leadership in industries of film, television, and theme parks. It is the third largest conglomerate of its kind in the US.


- Founded in 1923, headquartered in Burbank, California

- President and CEO: Bob Iger

- Number of employees: 199,000

- Market Cap: $167.4bn - EV: $176.7bn

- LTM Revenue: $56.9bn - LTM EBITDA: $17.25bn

- LTM EV/Revenue: 3.1x - LTM EV/EBITDA: 10.2x


Company details (21st Century Fox, Inc.)

21st Century Fox is an American, multinational mass media corporation, spun-off from News Corporation, founded by Rupert Murdoch in 1979. It is the fourth largest media conglomerate in the US.


- Founded in 2013, headquartered in New York

- President and CEO: James Murdoch

- Number of employees: 21,500

- Market Cap: $83.4bn - EV: $104.4bn

- LTM Revenue: $29.2bn - LTM EBITDA: $6.5bn