Roku Is Being Acquired. Here's What Investors Need to Know.

Rumors were swirling late last week that Roku (NASDAQ:ROKU) had put itself on the auction block. The scuttlebutt suggested that the company was in talks to be acquired by a major U.S. media company, according to Bloomberg, citing "people with knowledge of the matter." Those reports sent the stock up 20% on Friday, as investors considered the ramifications of a potential tie-up.

Turns out those rumors were well-founded. A joint press release dropped Monday morning, revealing that Roku had agreed to be acquired by Fox Corporation (NASDAQ:FOXA) (NASDAQ:FOX) in a deal that's sure to shake up the media space.

Here's what investors need to know.

Image source: The Motley Fool.

The end of an era

Fox has agreed to acquire Roku in a cash-and-stock deal that values the streaming pioneer at $22 billion or $160 per share. Fox will pay $96 in cash per share and 0.9693 shares of Fox Class A common stock for each share of Roku Class A and Class B stock outstanding. Once the deal closes, Fox shareholders are expected to own roughly 73% of the combined company, while Roku shareholders will own roughly 27%.

The press release noted that the transaction had already been unanimously approved by the Boards of Directors of both companies and is expected to close in the first half of calendar year 2027. Roku founder and CEO Anthony Wood will "have an ongoing role" in the company and will be appointed to Fox's board once the deal closes.

Fox notes that the transaction combines a streaming leader with the company's No. 1 live news and sports portfolio, thereby increasing its scale and reach, positioning it in the high-growth connected TV segment, and boosting Roku's streaming credentials with Fox's premium content.

A lot to like

It's easy to see why Fox would be interested in Roku. Earlier this year, Roku announced that it had surpassed 100 million streaming households worldwide.

The company's Howdy discount streaming service, which costs $2.99 per month, has attracted more than 1 million subscribers since its debut in August, by offering thousands of titles totaling more than 10,000 hours of entertainment, with movies and programming courtesy of Warner Bros. Discovery, Lionsgate, and FilmRise, as well as select original programming from Roku's own library.

Then there's The Roku Channel -- Roku's homegrown ad-supported channel -- which has established itself as one of the premier ad-supported channels. Data from Nielsen shows that The Roku Channel ended 2025 in the Top 10 among media companies, with a 3% share of all U.S. TV viewership.

That same data suggests that the combination of Fox and The Roku Channel will place it third on the list, commanding roughly 10% of the television viewing audience, behind Alphabet's YouTube and The Walt Disney Company, with 12.7% and 10.7%, respectively.

So why are the stocks trading lower today?

In a telling turn of events, both Roku and Fox are trading lower on Monday, after investors in both camps panned the idea. Indeed, Fox shares have slumped 16% as of 1:06 p.m. ET, while Roku is down about 1%.

Shareholders are likely concerned about Fox's plan to take on $12 billion in new debt and the 34% premium it's paying for Roku compared to its price before Friday's rumors. Additionally, Roku's willingness to offer its streaming devices at or near cost to bring viewers into its ecosystem has been a winning strategy for the company, but it will add a measure of complexity to Fox's business.

It also suggests that Roku shareholders believe Fox is underpaying and that a potential competing bid could emerge.

Stay tuned.

Danny Vena, CPA has positions in Alphabet, Roku, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Roku, Walt Disney, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.