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Recently Disney and Fox decided to merge and create a new company called "New Disney"

21st Century Fox And Disney Stockholders Approve Acquisition By Disney

What does that mean for me as a "disney classic" shareholder? Are my shares getting exchanged to "new disney" or do they basically become worthless because "disney classic" just creates movies and "new disney" will get all the cash?

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do they basically become worthless

No, it's fair to say that a vibrant, growing company's shares cannot just become worthless after it takes over another another company. In this case, it appears that Fox shareholders are getting a mix of cash and a new class of Disney shares for a portion of the Fox business. You will own a slightly smaller piece of a larger company. (Think about it, if you own a business and combine with another business of identical size, you and the other guy now own 1/2 of a business that's twice the size. In this case, the Fox acquisition is a smaller piece)

I've read the press release as well as a bit of the S4 and it appears your shares are not re-issued or swapped for the other class of shares.

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The merger of Fox and Disney will result in a new entity, aka New Disney. The terms for Fox shareholders is a bit more complex than a standard stock for stock merger/takeover. They will get a mix of cash and new Disney stock based on the collar formula spelled out in your link. Disney shareholders will get shares in New Disney which is the result of merging Disney and 21st Century Fox.

All of this is just transactional. Your investment consideration is whether you think that the combined entity will or will not do well going forward.

  • could you add a source or something? The other answer tells exactly the opposite of this answer. – Swizzler Jul 30 '18 at 16:29
  • What's to source? The terms of the deal are spelled out in the 4th paragraph of the link that you provided. Perhaps an explanation of M&A possibilities will help. Read the paragraph in this link titled "Combination" finance.zacks.com/happens-stocks-companies-merge-1670.html – Bob Baerker Jul 30 '18 at 17:12
  • as far I see the 4th paragraph only affects shareholders of Fox, not Disney – Swizzler Jul 31 '18 at 5:23
  • Read the paragraph titled "Combination" in the link in my previous comment. – Bob Baerker Jul 31 '18 at 12:43

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