Fox Corp has agreed to buy Roku, a streaming technology company, for $160 per share, which values Roku at about $22 billion. On Monday, Roku shares went up 2.8% in premarket trading, while Fox Class A shares dropped 13%. Roku’s smaller gain comes after its stock jumped 20% on Friday when news of the talks first broke. Also, the deal includes a large stock portion, which some shareholders may not prefer compared to an all-cash offer. Here’s a look at how the deal works and what it means for both companies.
Fox will pay $96 in cash and give 0.9693 Fox Class A shares for each Roku Class A and Class B share. The stock part is worth $64 per Roku share, based on Fox’s average stock price over the past 10 days through June 10. This brings the total offer to $160 per share. The big drop in Fox’s stock price shows that investors are worried about how much Fox is paying and whether buying Roku makes sense for the company.
Roku makes streaming devices and licenses its operating system to TV makers, letting viewers use platforms like Apple TV, Netflix, and Peacock. Roku earns money from advertising and by taking a share of subscription fees for channels and streaming services bought through its platform. This business model gives Roku steady income as more people use connected TVs.
In a joint statement, both companies said they plan to keep Roku as an open, partner-friendly platform and will continue to widely distribute Fox content. Fox Corp and News Corp, which owns Barron’s, have the same owners.
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