Fox Stock Is Down 15% After Announcing a $22 Billion Roku Deal. Is This a Buying Opportunity?

The highly competitory streaming and tv abstraction continues to acquisition consolidation.

On June 15, Fox Corp. (NASDAQ:FOX) announced it had reached an statement to get Roku (NASDAQ:ROKU) successful a woody already approved by some companies' boards of directors.

Missed Nvidia successful 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" awesome flashed for a little-known chipmaker called Nvidia. For the archetypal clip successful years, that aforesaid "Total Conviction" awesome is flashing for a institution 1/100th the size of Nvidia. Continue »

Fox volition wage $22 cardinal successful endeavor worth for Roku ($25 cardinal equity value), valuing the hardware streaming institution astatine $160 per share, a 28% premium to its June 10 price.

The woody volition beryllium 60% funded by currency and 40% done equity.

To assistance money the deal, Fox plans to instrumentality connected $8.3 cardinal of caller indebtedness and has secured span financing. Fox volition besides contented 152 cardinal of people A shares.

As of 1:17 p.m. ET today, shares of Fox traded implicit 14% lower. Shares of Roku were down slightly, but had risen importantly precocious past week connected takeover rumors. Following Fox's decline, is this a buying opportunity?

Person moving astatine table with aggregate monitors.

Image source: Getty Images.

What Fox is getting

While some are successful the tv and streaming space, Fox and Roku are antithetic companies.

Roku licenses its devices to streaming services and different tv providers, earning fees for contented and subscriptions purchased connected Roku devices. Roku besides has a beardown advertisement business.

Over the past year, Roku has generated astir $5 cardinal of revenue. Roughly fractional comes from advertising, 39% from subscriptions, and 11% from the merchantability of assorted Roku devices.

Roku generated a 44% gross borderline implicit the past twelvemonth and projects escaped currency travel of implicit $1 cardinal successful 2028.

This premix should beryllium charismatic to Fox, which generated implicit 58% of its gross successful the past 9 months from advertising. The remainder of Fox's gross comes from organisation and content.

Fox besides owns the streaming work Tubi, which has astir 100 cardinal monthly progressive users and implicit 1 cardinal monthly streaming hours.

Roku is the starring connected TV device, accounting for 44% of full U.S. hours spent viewing contented connected connected TV devices, arsenic of the 4th fourth of 2025.

The acquisition of Roku volition marque Fox the third-largest media supplier successful TV viewership, with 10.2% marketplace share, catapulting the institution past Paramount Skydance and Netflix.

Is this a buying opportunity?

Fox's banal is down large today, apt owed to expected shareholder dilution from the deal. Following today's decline, Fox's marketplace headdress is conscionable implicit $22 billion, astir the size of the Roku acquisition connected an enterprise-value basis.