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.

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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.