Fox shares rise 4.3% after Roku acquisition closes

Fox (FOXA) completed its acquisition of Roku, and its shares rose 4.3% at 9:36 a.m. ET, from a $66.64 close. Former Roku stockholders received $95.30 in cash and 0.9799 of a share of Fox Class A common stock for each Roku share held immediately before the closing.

Fox will issue about 144.5 million shares of Class A common stock and pay about $14.1 billion in aggregate cash to former Roku stockholders, excluding shares and cash payable on vested or converted Roku equity awards and dissenting shares.

Fox stockholders will own about 74% of the outstanding common stock and former Roku stockholders about 26%. Roku shares were to cease trading on the Nasdaq as of Nov. 6.

Fox expects about $400 million of run-rate cost synergies within two years of the close, plus potential revenue upside, and expects the deal to be accretive to free cash flow per share by the second full year after closing.

Lachlan K. Murdoch, Executive Chair and CEO, said "our top priority for the combined company is to continue to relentlessly serve audiences and partners."

Roku's open connected TV platform reaches more than 100 million households worldwide. Fox said Roku will continue to offer viewers and content partners the same choice it provides today.

Anthony Wood, Roku's founder and former Chairman, President and CEO, joined Fox's board, which increased to eight members, and will co-chair the new FOX Digital Platforms division. Paul Cheesbrough is co-chair and CEO of the division. Wood's compensation has not been determined.

The division includes Roku, Tubi, FOX One, Red Seat Ventures and other digital products and services.

Fox borrowed $2.0 billion under an amended and restated term loan agreement and $8.4 billion under a senior unsecured bridge facility. The bridge matures 364 days after the closing date and may be prepaid at any time. Both borrowings were used to pay part of the cash consideration and related amounts.

The bridge carries interest at either a base rate or Term SOFR plus an applicable margin tied to Fox's senior unsecured debt ratings. Both credit agreements require an operating income leverage ratio of 4.5 to 1.0, which can increase for four quarters in certain situations involving material acquisitions.

Fox also entered a $1.5 billion five-year unsecured revolving credit facility with Citibank, N.A. It matures Nov. 6, 2031, and may be extended for up to two additional one-year periods. Fox may request an increase to $2.25 billion. The company has not borrowed under the revolver, but about $29 million of letters of credit have been issued under it.