Fox: Thoughts on the Roku Acquisition

Research evidence excerpt

Fox: Thoughts on the Roku Acquisition

16 June 2026

Fox

• Roku brings valuable tax assets. We estimate Roku will bring NOLs

($1.6B) and R&D credits with an NPV of ~$1B.

• We see upside to management’s cost synergy estimates. Management

guided to $400M in cost synergies, which we believe is a conservative

estimate.

Transaction Terms

Fox announced that it will acquire Roku for $160/share in a 60% cash ($96/share)

and 40% stock (0.9693 Fox shares per Roku share) deal, implying a total equity

value of $25B and an enterprise value of $22B. The cash component of the deal

will be funded through ~$8B of new debt, with the remainder funded from the

roughly $9B of pro forma cash on hand expected at close. The deal is expected

to close by June 30, 2027 and following the transaction, the combined company

will be ~73% owned by Fox shareholders and 27% by Roku shareholders. We

believe the merger will likely be completed before mid-2027 given what we see

as minimal concerns regarding anti-trust in the US and even more so

internationally.

Management’s Guidance for Synergies and Leverage

Management expects the deal to generate $400M in run-rate cost synergies with

additional, unquantified revenue upside. Management expects to fully realize cost

synergies within 2 years of closing and the combined entity is expected to have

net leverage of 2.8x at closing, inclusive of 50% credit of run-rate cost synergies.

We view the $400M cost synergy guidance as conservative. Management also

expects the transaction to be free cash flow accretive within two years of closing,

and given the combined company’s strong free cash flow profile, to maintain a

mid-BBB investment-grade credit rating. Fox noted that the company intends to