BREAKINGVIEWS-Lachlan Murdoch makes ugly Roku mark on Fox

Roku, Inc. Class A
Fox Corporation Class A

Roku, Inc. Class A

ROKU

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Fox Corporation Class A

FOXA

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The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Jennifer Saba

NEW YORK, June 15 (Reuters Breakingviews) - The media mogul scion is stepping out of his father's shadow with the empire's largest-ever deal, paying $22 bln for the TV streamer. It's growing fast, but the implied return on investment amounts to a measly 5%. Being a bold buyer will be much harder than a cunning seller.

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CONTEXT NEWS

Fox said on June 15 it had agreed to buy TV streaming service Roku for $22 billion, including debt to expand its advertising and sports programming.

Under the terms of the transaction, Fox will pay $96 in cash and 0.9693 shares of Fox Class A common stock for each Roku Class A and Class B share, or $160 apiece.

Upon closing, Fox shareholders would own 73% of the enlarged company and Roku shareholders would hold the remaining 27%. Roku Founder, Chair and Chief Executive Anthony Wood is slated to have a role at the combined company and to join Fox's board of directors.

Morgan Stanley is providing $12 billion in bridge financing to fund the deal. Fox anticipates $400 million of annual cost savings.

Allen & Co and Morgan Stanley are advising Fox, and Qatalyst Partners is advising Roku.


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