**Fox Corp. Announces $22 Billion Acquisition of Roku**
On June 15, Fox Corp. (NASDAQ: FOXA, NASDAQ: FOX) announced a cash-and-stock deal to acquire Roku (NASDAQ: ROKU) for $22 billion, at $160 per share, representing a 33.7% premium over Roku’s previous closing price. This strategic move aims to provide Fox access to over 100 million streaming households, although the transaction is expected to close in the first half of 2027. Despite potential long-term synergies, the immediate reaction from investors was negative, as Fox’s stock dropped 16.8% on the announcement day and further declined 5.9% by the following week.
Fox plans to fund the acquisition’s cash portion with $12 billion in new debt, supported by bridge financing from Morgan Stanley. This increased leverage raises concerns about the risk profile of the company, especially since its core businesses generate stable but not high-growth free cash flow. Fox management aims for $400 million in annual cost synergies and free cash flow accumulation by year two, but shareholders face a long wait for significant returns on this investment, projected until 2029.
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