Fox Roku $22 billion deal DOJ consent decree, Digi Mart USA News: Fox (FOXA) is a step closer to owning Roku (ROKU), and Roku’s stock just set a fresh high.
The Justice Department is poised to clear Fox’s $22 billion Roku deal under a consent decree, Semafor reported on Nov. 2, citing people familiar with the deliberations. That is despite pushback from Newsmax majority owner Chris Ruddy, a Trump ally with a long-running dispute with Fox over streaming access for his channels.
Each Roku share receives $96 in cash plus 0.9693 of a Fox Class A share at closing, worth $160 when the deal was announced in June. A consent decree would let the deal close with conditions attached.
Semafor’s sources said the terms are unclear and the Justice Department could still change its position.
The $96 cash component is fixed, but the rest of the offer moves with Fox’s stock. On Nov. 4, Fox closed at $69.65, which put the offer at $163.51 a share.
That is why Roku could hit $163.08 that day, above June’s $160, and still sit below what the deal pays.
The Street has priced the deal in as well. Analysts’ average price target climbed from $111 a year ago to $162 by Oct. 29, just above the $160 the offer was worth in June.
Even the lowest target, $150, sits above the proxy’s peer-multiple range, though it falls inside Qatalyst’s standalone discounted cash flow range.
The business is in good shape. Third-quarter revenue rose 24% to $1.5 billion, net income came in at $183 million, and free cash flow reached $796 million over the trailing 12 months, according to Roku’s shareholder letter.
Analysts expect revenue to keep climbing every year through 2028.
The merger proxy’s standalone numbers do not agree. Qatalyst’s peer-multiple analysis implied $84.00 to $128.89 a share, while its discounted cash flow analysis implied $112.68 to $176.99, and both came before the third-quarter results.
At 48 times forward earnings on Nov. 2, the publisher writes that Roku looks demanding if the deal falls through.
If the deal fails over regulatory approvals, Fox would owe Roku a termination fee of about $1.2 billion, according to Fox’s latest 10-Q filing. That cushions the business, not the share price.
Rivals worry Fox could favor its own shows on Roku’s home screen, and The Roku Channel competes directly with Fox’s Tubi. Lachlan Murdoch has said the two would run separately, with ads sold across both.
Any decree would likely need to set rules on exactly those points.
State attorneys general are reportedly looking at the deal, and eight Democratic lawmakers led by Sen. Elizabeth Warren asked the Justice Department in July to scrutinize it.
Democrats won both chambers of Congress on Nov. 3, and the new Congress convenes in January, before the expected close.
The report lowers the odds of a rejection, but it does not remove the downside. Roku still carries the risk of a failed deal and of a drop in Fox’s stock.
Roku’s Nov. 4 high of $163.08 sat 43 cents below the $163.51 the offer was worth at Fox’s close that day.
