VALUATION

The Disney-Fox merger, which was completed in March 2019, was valued at $71.3 billion.
Under the terms of the merger agreement, Disney acquired most of 21st Century Fox's assets,
including its film and television studios, cable networks, and international operations, among
other assets. The deal did not include Fox News, Fox Sports, or the Fox broadcast network,
which were spun off into a separate company called Fox Corporation.

EXCHANGE RATIOS

In mergers and acquisitions (M&A), the exchange ratio measures the number of shares the
acquiring company has to issue for each individual share of the target firm.

The exchange ratios for the Walt Disney Company's acquisition of 21st Century Fox were as
follows:

 Fox shareholders received 0.2745 Disney shares for each share of Fox they owned
 Fox shareholders also received $38 in cash for each share of Fox they owned
 21st Century Fox shareholders will receive an exchange ratio of 0.3324 shares of
Disney common stock if the average Disney stock price at closing is above
$114.32 and 0.4063 shares of Disney common stock if the average Disney stock price
at closing is below $93.53.

These exchange ratios were determined based on the value of each company's shares at the
time of the acquisition. The total value of the transaction was estimated to be around $71.3
billion.

TRANSACTION DETAILS OF THE ACQUISITION

 Disney is expected to pay a total of approximately $35.7 billion in cash and issue
approximately 343 million new shares to 21st Century Fox shareholders, representing
about a 19% stake in Disney on a pro forma basis.
 The collar on the stock consideration will ensure that 21st Century Fox shareholders
will receive a number of Disney shares equal to $38 in value if the average Disney
stock price at closing is between $93.53 and $114.32.
 21st Century Fox shareholders will receive an exchange ratio of 0.3324 shares of
Disney common stock if the average Disney stock price at closing is above $114.32
and 0.4063 shares of Disney common stock if the average Disney stock price at
closing is below $93.53.
 Elections of cash and stock will be subject to proration to the extent cash or stock is
oversubscribed.
 Disney will also assume about $13.8 billion of net debt of 21st Century Fox. The
acquisition price implies a total equity value of approximately $71.3 billion and a total
transaction value of approximately $85.1 billion (assuming no tax adjustment).
PRE FINANCIAL PERFORMANCE

DISNEY

 Disney’s annual revenue in the Fiscal Year 2018 amounts to $59.4 billion, where a
major portion of $45 billion has been generated in the US and Canada. According to
Statista the media networks and parks occupy a significant portion of Disney’s total
revenue at $24,5 billion and $20,3 billion, respectively in 2018.
 Disney, before the acquisition, was the world’s largest media company and under the
leadership of CEO Bob Iger had recently been buying up other media assets and
intellectual properties such as Pixar in 2006 for over 7 billion dollars, Marvel in 2009
for over 4 billion dollars, and Lucasfilm in 2012 for more than 4 billion dollars.

FOX

 Prior to the acquisition by Disney, Fox was a powerhouse in the entertainment

industry. One of the 6 major studios and the 4th largest media conglomerate in the
world.  

 According to the 2018 Fortune 500 list of the largest US companies by total revenue,
the Fox Corporation was ranked number 109 reporting $28,500 million of its revenue
in 2018.
 21st Century Fox, owned by media mogul Rupert Murdoch, included the 20th
Century Fox, Fox Searchlight, Fox 2000, Blue Sky Animation film studios, The Fox
News, Fox Sports Stations, FX Cable Stations, and National Geographic TV holdings
along with a 30% share of Hulu streaming and other international holdings.
POST FINANCIAL PERFORMANCE

FOR DISNEY

 If we look at Disney’s share price graph we will find out that it has had a positive
growth trend over the last 10 years and, especially, in 2019 after its acquisition of 21st
Century Fox Disney’s stock reached its historical maximum and now the price per
share is estimated at the level of $133,36 (23d of April 2019)

 After the acquisition of Fox, Disney has become one of the largest online streaming
service providers, followed by Netflix and YouTube. A new streaming service
Disney+ has also been put forward recently. For now, it can be said that the
combination of Disney and Fox has successfully formed one of the largest films and
media players in the world, and this will continue to reshape the layout of the worlds’
film and media industry.
 When looking at the financial performance of this acquisition, the price (cost) of the
acquisition was 71.3 billion US dollars. In contrast, the market value of Walt Disney
has increased by more than 40 per cent, with an average annual increase rate of more
than 18 per cent.
 From the perspective of the revenue of Walt Disney, it has witnessed a similar growth
pattern, with an annual increase rate of more than 6 percent (from 90000 million USD
in 2018 to 100000 million USD in 2021).
 With respect to the market share percentage, before the acquisition, Disney had a
market share of around 16 per cent and Fox of less than 8 per cent. By the end of the
year 2020, their market share had grown to 26 per cent and is expected to continue
this trend of an annual increase rate of more than 6 per cent.
 Other than the indicators of stock value, revenue and market share, other financial
indicators such as costs, cash flow, return on investment and so forth, all of which
have experienced dramatic growth after the acquisition. Thus, it can be said, in the
dimension of the financial performance after the acquisition, it is definitely a win- win
situation for both sides.
 Beyond the financial performance, it is considered that Disney has gained even more
advantages in strategic positions. After the expansion of Disney, it gradually becomes
to enter the dominant position in the US film-making supply and distribution chain.

FOR FOX

 If we have a look at the 21st Century Fox share price graph we will notice that its
shares had an overall positive trend across 15 years, though it had some downfalls in
2008 and during the period of 2015-2017. However, we can observe that the share
reached its historical maximum on March 18, 2019 (2 days before the company was
finally acquired by Disney).

 The Walt Disney Company Signs Amended Acquisition Agreement To Acquire

Twenty-First Century Fox, Inc., For $71.3 Billion In Cash And Stock.
 Fox shareholders received cash and stock in Disney as a result of the merger.
 As for what Fox gained from this, it received a significant amount of money in
exchange for its assets, and the company is now able to focus on its remaining assets,
such as Fox News, Fox Sports, and its broadcast network.
 This acquisition also allowed Fox to rid itself of some underperforming assets and
reduce its debt.

 Approximately $71 billion, including $35.7 billion in cash and nearly $35 billion in
Disney Common Stock were paid to the former holders of 21 Century Fox Common
Stock as a result of the merger;