Fox to acquire Roku for $22B; Fox shares slide

Fox Corp. has agreed to buy Roku in a cash-and-stock transaction valued at about $22 billion including debt, paying $160 per Roku share. The boards of both companies approved the deal. Under the terms, Fox shareholders are expected to hold roughly 73% of the combined company, with Roku shareholders owning the remainder.

Fox will fund the cash portion of the purchase with available cash and new debt financing, including a $12 billion bridge facility. The company is targeting about $400 million in annual cost synergies and expects the transaction to be accretive to free cash flow per share by the second full year after closing.

The deal pairs Fox’s live sports, news and entertainment content with Roku’s connected-TV operating system and advertising platform. The companies said the combined business would rank as the third-largest player in the U.S. television market by share of viewers. Roku reaches more than 100 million households globally, and industry data indicate the platform reaches more than half of U.S. broadband TV households and accounts for a substantial portion of streaming activity.

Market reaction was mixed. Fox’s stock fell about 13% in premarket trading. Roku shares rose 1.7% to $146.11, extending gains after reports that the company had explored a sale and held talks with potential buyers.

Brokerages adjusted coverage after the announcement. Needham raised its price target on Roku to $170 and maintained a Buy rating. Citizens increased its target to $175 and kept a Market Outperform rating. Analysts at JPMorgan wrote that the acquisition could reposition Fox toward digital streaming and provide direct distribution into more than 100 million households for live sports, news and entertainment, while also warning that integrating a major technology platform into a legacy media company could add execution risk and operational complexity.

Roku Chief Executive Anthony Wood described the agreement as an opportunity to accelerate the company’s vision and scale, and noted plans to innovate for viewers, partners and advertisers. Fox Chief Executive Lachlan Murdoch characterized the transaction as a defining moment for Fox. Wood is expected to remain involved with the combined company and to join Fox’s board after the deal closes.