The Walt Disney Company has responded to Comcast’s rival $65 billion bid for 21st Century Fox with a revised $71.3 billion half-stock, half-cash offer.
Disney’s original offer, made in December 2017, was a $52.4 billion all-stock bid. Under the terms of the new deal, Disney is offering $38 per share in either cash or shares of Disney common stock to Fox shareholders. The deal puts a collar on the stock offer that ensures Fox shareholders will get $38 per share if 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.
All in all, Disney expects to shell out 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.
Disney will also take on about $13.8 billion of net debt from 21st Century Fox, raising the total transaction value to approximately $85.1 billion.
“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 Iger, chairman and CEO of The Walt Disney Company, in a statement (PDF). “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.”
Fox said that the new deal from Disney is superior to the competing bid from Comcast.
"We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry," said Rupert Murdoch, executive chairman of 21st Century Fox, in a statement. "We remain convinced that the combination of 21CF's iconic assets, brands and franchises with Disney's will create one of the greatest, most innovative companies in the world."
For its increased bid, Disney will still be acquiring 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.
Should regulators require divestitures, Disney said that its new agreement has increased the scope of its commitment to take actions required to secure regulatory approval. 21st Century Fox will spin off 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.