FOX completes Roku deal and builds a larger streaming platform

Fox Corporation (NASDAQ:FOXA) has completed its acquisition of Roku, creating a much larger streaming and connected-TV operation but leaving FOX with a substantial refinancing and integration task. The transaction gives former Roku shareholders about 26% of FOX’s outstanding common stock, while FOX shareholders retain approximately 74%.

Roku Deal Closes With Cash, Shares and New Debt

Under the merger terms, each Roku share was exchanged for US$95.30 in cash and 0.9799 of a FOX Class A share. FOX issued approximately 144.5 million shares and paid about US$14.1 billion in cash consideration, excluding amounts linked to vested or converted equity awards and any dissenting shareholders.

The closing follows FOX’s strong fiscal first-quarter results, when revenue rose 22% to US$4.571 billion and adjusted EBITDA increased 54% to US$1.641 billion. Those figures included substantial event-linked advertising and sports-related effects; the Roku transaction now adds a structurally different technology and platform business to the portfolio.

US$10.4 Billion of Acquisition Financing

FOX borrowed US$2 billion under an amended term loan facility and a further US$8.4 billion under a senior unsecured bridge facility to fund part of the cash consideration and related transaction costs. The bridge facility matures 364 days after closing, although FOX can repay it in whole or in part at any time.

The bridge facility requires FOX to maintain an operating-income leverage ratio of 4.5 times, with scope for that threshold to rise for four quarters in certain material acquisitions. FOX has also established a US$1.5 billion five-year unsecured revolving facility, expandable to US$2.25 billion under the agreement. No funds had been drawn from that facility at the filing date, although about US$29 million of letters of credit had been issued.

FOX Sets Synergy Target as Roku Leadership Joins

FOX says it expects approximately US$400 million of annual run-rate cost synergies within two years of closing, alongside additional potential revenue benefits. It also anticipates the deal will be accretive to free cash flow per share by the second full year after completion. Those are company expectations rather than achieved outcomes, and the filing does not provide a detailed debt repayment schedule or final interest margins.

Roku founder Anthony Wood has joined the FOX board and will serve as co-chair of FOX Digital Platforms alongside Paul Cheesbrough. The newly expanded division includes Roku, Tubi, FOX One, Red Seat Ventures and other digital businesses. Roku will continue operating as an open distribution platform, according to FOX, while its shares cease trading on Nasdaq.

Pro Forma Numbers Are Still to Come

The filing leaves an important piece of the financial picture unresolved: FOX will provide the acquired-business financial statements and pro forma financial information in a later amendment. Until those figures arrive, shareholders have the headline consideration, financing structure and synergy target, but not the full combined earnings, asset or liability profile.