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Disney Valuation Not Moved by Fox Deal

The mouse's move to buy Fox's entertainment assets is strategically sound, but the benefits will be offset by the price paid.

Disney Valuation Not Moved by Fox Deal
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Neil Macker: Disney announced on Thursday that it would acquire the entertainment assets of Fox for $52 billion in stock and the assumption of $14 billion in net debt. We expect the deal to receive regulatory approval, but do expect the deal to take at least up to 18 months to close. We are maintaining our wide-moat ratings for both Fox and Disney.

We are raising our fair value estimate for Fox to $43 from $35 to account for the value of the Disney shares and the value of the stub company. We are maintaining our $130 fair value estimate for Disney, as we believe the cost of obtaining the Fox entertainment assets will be offset by the revenue generated and the cost savings from the deal.

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Neil Macker does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.