An Accretion / Dilution Analysis of The Walt Disney Company's Acquisition of Twenty-First Century Fox, Inc.
Open Access
Author:
Arnold, Victoria
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Coenraad Arnout P Pinkse, Thesis Supervisor Russell Paul Chuderewicz, Thesis Honors Advisor
Keywords:
M&A Merger Acquisition Disney Fox Finance Film Box Office Antitrust
Abstract:
The purpose of this thesis is to analyze The Walt Disney Company’s acquisition of the various assets of 21st Century Fox, and the subsequent spinoff of the rest of Fox’s assets. More specifically, the thesis will determine the specific operating scenarios in which Disney will achieve an accretive or a dilutive outcome. In order to achieve these results, I will complete a detailed accretion/dilution analysis through various financial modeling techniques. The numerous operating cases tested in this analysis will be determined by the synergies associated with the transaction, which will be subject to my discretion after the completion of in-depth research on the two companies, the industry, the macroeconomy, the overall financial market, etc. I hypothesize that accretion will occur in this acquisition when Disney incurs moderate revenue synergies and significant cost synergies. In addition, I hypothesize that movie ticket prices will increase in the years following the acquisition, on top of a decreased movie output by the combined entity.
