S-4 1 d770960ds4.htm S-4 S-4
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As filed with the Securities and Exchange Commission on June 25, 2018

Registration No. 333-[]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

TWDC HOLDCO 613 CORP.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   7990   83-0940635
(State of Incorporation)  

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification No.)

c/o The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

Telephone: (818) 560-1000

(Address, including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Alan N. Braverman

Senior Executive Vice President and General Counsel

500 South Buena Vista Street

Burbank, California 91521

Telephone: (818) 560-1000

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With a copy to:

 

Faiza J. Saeed, Esq.

George F. Schoen, Esq.

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York 10019

(212) 474-1000

 

Gerson Zweifach

Senior Executive Vice President and Group

General Counsel, Chief Compliance Officer

Janet Nova

Executive Vice President

and Deputy Group General Counsel

Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

 

Howard L. Ellin, Esq.

Brandon Van Dyke, Esq.

Skadden, Arps, Slate, Meagher &

Flom LLP and Affiliates

4 Times Square

New York, New York 10036

(212) 735-3000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☒  (Do not check if a smaller reporting company)    Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount

to be
registered

 

Proposed

maximum
offering price

per unit

 

Proposed

maximum
aggregate

offering price

  Amount of
registration fee

Common stock, par value $0.01 per share

  412,557,793 shares(1)   N/A   $47,843,523,533.90(2)   $5,956,518.68(3)(4)

 

 

(1) Represents the estimated maximum number of shares of common stock, par value $0.01 per share, of the registrant (“New Disney common stock”) to be issued upon completion of the 21CF merger described in the joint proxy statement/prospectus contained herein (the “21CF merger”) and is based on one half of the product of (a) 1,876,969,033, which is the sum of (i) 1,054,032,541 shares of class A common stock, par value $0.01 per share, of Twenty-First Century Fox, Inc. (“21CF class A common stock”) outstanding as of May 29, 2018, plus (ii) 798,520,953 shares of class B common stock, par value $0.01 per share, of Twenty-First Century Fox, Inc. (“21CF class B common stock”) outstanding as of May 29, 2018, plus (iii) 24,415,539 shares of 21CF class A common stock underlying equity awards as of June 20, 2018, multiplied by (b) 0.4396, which is the maximum exchange ratio under the Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, by and among Twenty-First Century Fox, Inc., The Walt Disney Company (“Disney”), TWDC Holdco 613 Corp., WDC Merger Enterprises I, Inc. and WDC Merger Enterprises II, Inc.
(2) Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is equal to the sum of (a) the product of (i) $44.58 (the average of the high and low prices of 21CF class A common stock as reported on the Nasdaq Global Select Market on June 18, 2018) times (ii) the sum of 1,054,032,541 shares of 21CF class A common stock outstanding as of May 29, 2018 plus 24,415,539 shares of 21CF class A common stock underlying equity awards plus (b) the product of (i) $44.415 (the average of the high and low prices of 21CF class B common stock as reported on the Nasdaq Global Select Market on June 18, 2018) times (ii) 798,520,953 shares of 21CF class B common stock outstanding as of May 29, 2018, minus (c) $35.7 billion, which is the maximum amount of cash consideration to be delivered in the 21CF merger.
(3) Computed in accordance with Rule 457(f) under the Securities Act to be $5,956,518.68, which is equal to 0.0001245 multiplied by the proposed maximum aggregate offering price of $47,843,523,533.90.
(4) Pursuant to Rule 457(p) under the Securities Act, the registrant, a wholly owned subsidiary of Disney, hereby offsets the registration fee required in connection with this registration statement by $5,956,518.68 previously paid by Disney (out of the total registration fee paid of $8,396,033.87) in connection with the registration of shares of common stock, par value $0.01 per share, of Disney (“Disney common stock”) on Form S-4 (Commission File No. 333-224335), as amended, initially filed with the Securities and Exchange Commission on April 18, 2018, with respect to which no shares of Disney common stock were issued or sold. Accordingly, no registration fee is owed in connection with this registration statement.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this joint proxy statement/prospectus is not complete and may be changed. TWDC Holdco 613 Corp. may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities and TWDC Holdco 613 Corp. is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION, DATED JUNE 25, 2018

 

LOGO    LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[●], 2018

Dear Stockholders of The Walt Disney Company and Twenty-First Century Fox, Inc.:

The Walt Disney Company, which we refer to as Disney, and Twenty-First Century Fox, Inc., which we refer to as 21CF, have entered into an Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, which we refer to as the combination merger agreement. Pursuant to the terms of the combination merger agreement, following the distribution (as defined below), (1) WDC Merger Enterprises I, Inc., a Delaware corporation and wholly owned subsidiary of New Disney (as defined below), will be merged with and into Disney, and Disney will continue as the surviving corporation, which we refer to as the Disney merger, and (2) WDC Merger Enterprises II, Inc., a Delaware corporation and wholly owned subsidiary of New Disney, will be merged with and into 21CF, and 21CF will continue as the surviving corporation, which we refer to as the 21CF merger, and together with the Disney merger, the mergers. As a result of the mergers, Disney and 21CF will become direct wholly owned subsidiaries of New Disney, which will be renamed “The Walt Disney Company” concurrently with the mergers.

Prior to the completion of the mergers, 21CF and a newly-formed subsidiary of 21CF, which we refer to as New Fox, will enter into a separation agreement, which we refer to as the separation agreement, pursuant to which 21CF will, among other things, engage in an internal restructuring, which we refer to as the separation, whereby it will transfer to New Fox a portfolio of 21CF’s news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network, and certain other assets, and New Fox will assume from 21CF certain liabilities associated with such businesses. 21CF will retain all assets and liabilities not transferred to New Fox, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. Following the separation and prior to the completion of the 21CF merger, 21CF will distribute all of the issued and outstanding common stock of New Fox to 21CF stockholders (other than holders that are subsidiaries of 21CF) on a pro rata basis, which we refer to as the distribution, in accordance with terms set forth in the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc., which we refer to as the distribution merger agreement. Prior to the distribution, New Fox will pay to 21CF a dividend in the amount of $8.5 billion. New Fox will incur indebtedness sufficient to fund the dividend, which indebtedness will be reduced after the 21CF merger by the amount of the cash payment, as described below.

If the transactions are completed, each issued and outstanding share of 21CF class A common stock, par value $0.01 per share, and 21CF class B common stock, par value $0.01 per share (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) shares held by subsidiaries of 21CF, which we refer to as the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for, at the election of the holder thereof and subject to automatic proration and adjustment as described in the accompanying joint proxy statement/prospectus, consideration, which we refer to as the 21CF merger consideration, payable in either cash, which we refer to as the 21CF cash consideration, or New Disney common stock, which we refer to as the 21CF stock consideration. The value of the 21CF merger consideration may fluctuate with the market price of Disney common stock and will, subject to the collar described in the accompanying joint proxy statement/prospectus, be determined based on the volume weighted average trading price of a share of Disney common stock on the New York Stock Exchange over the fifteen consecutive trading day period ending on (and including) the trading day that is three trading days prior to the date of the effective


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time of the 21CF merger, which we refer to as the average Disney stock price. Subject to the election, proration and adjustment procedures described in the accompanying joint proxy statement/prospectus, each share of 21CF common stock will be exchanged for an amount, payable in cash or shares of New Disney common stock, equal to fifty percent (50%) of the sum of (i) $38.00 plus (ii) the value (determined based on the average Disney stock price) of a number of shares of Disney common stock equal to the exchange ratio described below. We refer to the amount calculated pursuant to the formula in the previous sentence as the per share value. If the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324. If the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to $38.00 divided by the average Disney stock price. If the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063. The number of shares of New Disney common stock to be delivered in exchange for each share of 21CF common stock to 21CF stockholders electing to receive the 21CF stock consideration will be equal to the per share value divided by the average Disney stock price.

As explained in more detail in the accompanying joint proxy statement/prospectus, whether a 21CF stockholder makes a cash election, a stock election or no election, the value of the consideration that such stockholder receives as of the closing date of the 21CF merger will be approximately equivalent based on the average Disney stock price used to calculate the per share value. However, because the per share value may fluctuate with the market price of Disney common stock, 21CF stockholders will not know at the time that they vote on the adoption of the combination merger agreement the number of shares of New Disney common stock or the amount of cash they will receive in the 21CF merger.

The 21CF merger consideration is subject, pursuant to the terms of the combination merger agreement, to automatic proration and adjustment, as applicable, to ensure that the aggregate 21CF cash consideration (before giving effect to the adjustment for transaction taxes described below) is equal to $35.7 billion, which we refer to as the maximum cash amount. As a result, the form of consideration a 21CF stockholder elects to receive may be adjusted such that it may receive, in part, a different form of consideration than the form it elected.

The 21CF merger consideration may be subject to an adjustment based on the final estimate of certain tax liabilities arising from the separation and distribution and other transactions contemplated by the combination merger agreement. We refer to such adjustment as the tax adjustment amount. The 21CF merger consideration in the combination merger agreement was set based on an estimate of $8.5 billion for the transaction tax (as defined in the accompanying joint proxy statement/prospectus), and will be adjusted immediately prior to the consummation of the transactions if the final estimate of the transaction tax at closing is more than $8.5 billion or less than $6.5 billion. Such adjustment could increase or decrease the 21CF merger consideration, depending upon whether the final estimate is lower or higher, respectively, than $6.5 billion or $8.5 billion. Additionally, if the final estimate of the tax liabilities is lower than $8.5 billion, Disney will make a cash payment to New Fox reflecting the difference between such amount and $8.5 billion, up to a maximum cash payment of $2 billion. As described in the accompanying joint proxy statement/prospectus under “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation”, it is likely that the final estimate of the tax liabilities taken into account will differ materially from the amount estimated for purposes of setting the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. Because of the tax adjustment amount, the amount of cash or shares of New Disney common stock that 21CF stockholders will receive in the 21CF merger cannot be determined until immediately prior to completion of the 21CF merger. See the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of the accompanying joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the transaction tax and the average Disney stock price.

If the transactions are completed, each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class. At the Disney effective time, New Disney will be renamed “The Walt Disney Company”.


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At the special meeting of Disney stockholders, Disney stockholders will be asked to consider and vote on the following matters:

 

    a proposal to approve the issuance of New Disney common stock to 21CF stockholders in connection with the 21CF merger, which we refer to as the share issuance proposal; and

 

    a proposal to adjourn the Disney special meeting, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal, which we refer to as the Disney adjournment proposal.

Approval of the share issuance proposal and the Disney adjournment proposal each requires the affirmative vote of holders of a majority of the shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote thereon. This vote will also satisfy the vote requirements of Section 312.07 of the NYSE Listed Company Manual with respect to the share issuance proposal, which requires that the votes cast in favor of such proposal must exceed the aggregate of votes cast against and abstentions.

At the special meeting of 21CF stockholders, 21CF stockholders will be asked to consider and vote on the following matters:

 

    a proposal to adopt the combination merger agreement, which we refer to as the combination merger proposal;

 

    a proposal to adopt the distribution merger agreement, which we refer to as the distribution merger proposal;

 

    a proposal to approve an amendment to the Restated Certificate of Incorporation of 21CF, which we refer to as the 21CF charter, to provide that the hook stock shares will not receive any consideration in connection with the distribution or in the 21CF merger, which we refer to as the 21CF charter amendment proposal;

 

    a proposal to adjourn the 21CF special meeting, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes to approve the combination merger proposal, the distribution merger proposal or the 21CF charter amendment proposal, which we refer to as the 21CF adjournment proposal; and

 

    a non-binding, advisory proposal to approve the compensation that may become payable to 21CF’s named executive officers in connection with the transactions, which we refer to as the compensation proposal.

Approval of the combination merger proposal and the distribution merger proposal require the affirmative vote of holders of a majority of the outstanding shares of 21CF class A common stock and 21CF class B common stock entitled to vote thereon, voting together as a single class. Approval of the 21CF charter amendment proposal requires the affirmative vote of holders of a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon. Approval of the 21CF adjournment proposal and the compensation proposal require the affirmative vote of a majority of the votes cast thereon by holders of 21CF class B common stock entitled to vote thereon. Holders of 21CF class A common stock are not entitled to vote on the 21CF charter amendment proposal, the 21CF adjournment proposal or the compensation proposal.

The transactions cannot be completed unless Disney stockholders approve the share issuance proposal and 21CF stockholders approve the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal. Your vote is very important, regardless of the number of shares you own. Even if you plan to attend the 21CF special meeting or the Disney special meeting, as applicable, in person, please complete, sign, date and return, as promptly as possible, the enclosed proxy or voting instruction card in the accompanying prepaid reply envelope or submit your proxy by telephone or the Internet prior to the 21CF special meeting or Disney special meeting, as applicable, to ensure that your shares will be represented at the 21CF special meeting or the Disney special meeting, as applicable, if you are unable to attend. If you hold your shares in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares.


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After careful consideration, the Disney board of directors unanimously approved the combination merger agreement and the issuance of shares of New Disney stock to 21CF stockholders in connection with the 21CF merger and determined that the combination merger agreement and the transactions contemplated thereby, including the mergers and the issuance of shares of New Disney stock to 21CF stockholders pursuant to the 21CF merger, are advisable and in the best interests of Disney and its stockholders. The Disney board of directors accordingly unanimously recommends that Disney stockholders vote “FOR” the share issuance proposal and the Disney adjournment proposal. In considering the recommendation of the Disney board of directors, you should be aware that directors and executive officers of Disney have certain interests in the transactions that may be different from, or in addition to, the interests of Disney stockholders generally. See the section entitled “Interests of Disney’s Directors and Executive Officers in the Transaction” beginning on page [] of the accompanying joint proxy statement/prospectus for a more detailed description of these interests.

After careful consideration, the 21CF board of directors approved the combination merger agreement and the distribution merger agreement and determined that the transactions contemplated thereby, including the 21CF merger, the 21CF charter amendment and the distribution, are advisable, fair to and in the best interests of 21CF and its stockholders. The 21CF board of directors accordingly recommends that 21CF stockholders vote “FOR” each of the combination merger proposal, the distribution merger proposal, the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal. In considering the recommendation of the 21CF board of directors, you should be aware that directors and executive officers of 21CF have certain interests in the transactions that may be different from, or in addition to, the interests of 21CF stockholders generally. See the sections entitled “Non-Binding, Advisory Vote on Transactions-Related Compensation for 21CF’s Named Executive Officers” beginning on page [●] of the accompanying joint proxy statement/prospectus and “Interests of 21CF’s Directors and Executive Officers in the Transactions” beginning on page [●] of the accompanying joint proxy statement/prospectus for a more detailed description of these interests.

We urge you to read carefully and in its entirety the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page [●] of the accompanying joint proxy statement/prospectus.

On behalf of the boards of directors of 21CF and Disney, thank you for your consideration and continued support.

Sincerely,

[Signatures]

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ATTACHED JOINT PROXY STATEMENT/PROSPECTUS OR THE SECURITIES TO BE ISSUED PURSUANT TO THE 21CF MERGER UNDER THE ATTACHED JOINT PROXY STATEMENT/PROSPECTUS NOR HAVE THEY DETERMINED IF THE ATTACHED JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The accompanying joint proxy statement/prospectus is dated [●], 2018 and is first being mailed to 21CF and Disney stockholders on or about [●], 2018.


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LOGO

THE WALT DISNEY COMPANY

500 SOUTH BUENA VISTA STREET

BURBANK, CALIFORNIA 91521

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Dear Stockholders of The Walt Disney Company:

You are cordially invited to attend a special meeting of The Walt Disney Company (“Disney”) stockholders. The special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●], to consider and vote on the following matters:

 

  1. a proposal to approve the issuance of New Disney common stock, par value $0.01 per share to stockholders of Twenty-First Century Fox, Inc. (“21CF”) contemplated by the Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, as may be amended from time to time, by and among 21CF, a Delaware corporation, Disney, a Delaware corporation, TWDC Holdco 613 Corp. (“New Disney”), a Delaware corporation and a wholly owned subsidiary of Disney, WDC Merger Enterprises I, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney and WDC Merger Enterprises II, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus (referred to as the “share issuance proposal”); and

 

  2. a proposal to approve adjournments of the Disney special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Disney special meeting to approve the share issuance proposal (referred to as the “Disney adjournment proposal”).

The record date for the Disney special meeting is May 29, 2018. Only stockholders of record of Disney as of the close of business on May 29, 2018, which we refer to as the Disney record date, are entitled to notice of, and to vote at, the Disney special meeting. The acquisition of 21CF cannot be completed unless the holders of a majority of the shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote at the meeting approve the share issuance proposal. Your vote is very important, regardless of the number of shares of Disney common stock that you own.

The Disney board of directors unanimously recommends that you vote “FOR” the share issuance proposal and the Disney adjournment proposal. In considering the recommendation of the Disney board of directors, you should be aware that directors and executive officers of Disney have certain interests in the transactions that may be different from, or in addition to, the interests of Disney stockholders generally. See the section entitled “Interests of Disney’s Directors and Executive Officers in the Transaction” beginning on page [●] of the accompanying joint proxy statement/prospectus for a more detailed description of these interests.

EVEN IF YOU PLAN TO ATTEND THE DISNEY SPECIAL MEETING IN PERSON, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET PRIOR TO THE DISNEY SPECIAL MEETING TO ENSURE THAT YOUR SHARES OF DISNEY COMMON STOCK WILL BE REPRESENTED AT THE DISNEY SPECIAL MEETING IF YOU ARE UNABLE TO ATTEND. IF YOU HOLD YOUR SHARES IN “STREET NAME” THROUGH A BANK, BROKERAGE FIRM OR OTHER NOMINEE, YOU SHOULD FOLLOW THE PROCEDURES PROVIDED BY YOUR


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BANK, BROKERAGE FIRM OR OTHER NOMINEE TO VOTE YOUR SHARES. IF YOU ATTEND THE DISNEY SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

 

By Order of the Board of Directors,

Alan N. Braverman

 

 

Senior Executive Vice President, General Counsel and Secretary

Burbank, CA

Dated: [●], 2018


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LOGO

TWENTY-FIRST CENTURY FOX, INC.

1211 Avenue of the Americas New York, New York 10036

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Dear Stockholders of Twenty-First Century Fox, Inc.:

You are cordially invited to attend a special meeting of Twenty-First Century Fox, Inc. (“21CF”) stockholders. The special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●], to consider and vote on the following matters:

 

  1. a proposal to adopt the Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, as may be amended from time to time, by and among 21CF, a Delaware corporation, The Walt Disney Company (“Disney”), a Delaware corporation, TWDC Holdco 613 Corp. (“New Disney”), a Delaware corporation and a wholly owned subsidiary of Disney, WDC Merger Enterprises I, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney, and WDC Merger Enterprises II, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus (referred to as the “combination merger proposal”);

 

  2. a proposal to adopt the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, as it may be amended from time to time, by and between 21CF, a Delaware corporation, and 21CF Distribution Merger Sub, Inc., a Delaware corporation, a copy of which is attached as Annex B to the accompanying joint proxy statement/prospectus (referred to as the “distribution merger proposal”);

 

  3. a proposal to approve an amendment to the Restated Certificate of Incorporation of 21CF (referred to as the “21CF charter”) with respect to the hook stock shares as described in the accompanying joint proxy statement/prospectus and the certificate of amendment to the 21CF charter, a copy of which is attached as Annex E to the accompanying joint proxy statement/prospectus (referred to as the “21CF charter amendment proposal”);

 

  4. a proposal to approve adjournments of the 21CF special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the 21CF special meeting to approve the combination merger proposal, the distribution merger proposal or the 21CF charter amendment proposal (referred to as the “21CF adjournment proposal”); and

 

  5. a proposal to approve, by non-binding, advisory vote, certain compensation that may be paid or become payable to 21CF’s named executive officers in connection with the transactions and the agreements and understandings pursuant to which such compensation may be paid or become payable (referred to as the “compensation proposal”).

The record date for the 21CF special meeting is May 29, 2018. Only stockholders of record of 21CF as of the close of business on May 29, 2018, which we refer to as the 21CF record date, are entitled to notice of, and to vote at, the 21CF special meeting. Approval of the combination merger proposal and the distribution merger proposal require the affirmative vote of holders of a majority of the outstanding shares of 21CF class A common stock, par value $0.01 per share (referred to as “21CF class A common stock”), and 21CF class B common stock, par value $0.01 per share (referred to as “21CF class B common stock”; holders of 21CF class A common stock and 21CF class B common stock referred to as the “21CF stockholders”), entitled to vote thereon, voting together as a single class. Approval of the 21CF charter amendment proposal requires the affirmative vote of holders of a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon. Approval of the 21CF adjournment proposal and the compensation proposal require the affirmative vote of a majority of the votes cast


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thereon by holders of 21CF class B common stock entitled to vote thereon. Holders of 21CF class A common stock are not entitled to vote on the 21CF charter amendment proposal, the 21CF adjournment proposal or the compensation proposal. The merger with Disney and the separation of certain 21CF assets into a new, publicly-traded traded company, the stock of which will be distributed to 21CF stockholders (other than holders of the hook stock shares) on a pro rata basis, cannot be completed unless 21CF stockholders, voting together as a single class, approve the combination merger proposal and the distribution merger proposal and the holders of 21CF class B common stock approve the 21CF charter amendment proposal. Your vote is very important, regardless of the number of shares of 21CF common stock that you own.

The 21CF board of directors recommends that 21CF stockholders vote “FOR” each of the combination merger proposal, the distribution merger proposal, the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal. In considering the recommendation of the 21CF board of directors, you should be aware that directors and executive officers of 21CF have certain interests in the transactions that may be different from, or in addition to, the interests of 21CF stockholders generally. See the sections entitled “Non-Binding, Advisory Vote on Transactions-Related Compensation for 21CF’s Named Executive Officers” beginning on page [●] of the accompanying joint proxy statement/prospectus and “Interests of 21CF’s Directors and Executive Officers in the Transactions” beginning on page [●] of the accompanying joint proxy statement/prospectus for a more detailed description of these interests.

EVEN IF YOU PLAN TO ATTEND THE 21CF SPECIAL MEETING IN PERSON, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET PRIOR TO THE 21CF SPECIAL MEETING TO ENSURE THAT YOUR SHARES OF 21CF COMMON STOCK WILL BE REPRESENTED AT THE 21CF SPECIAL MEETING IF YOU ARE UNABLE TO ATTEND. IF YOU HOLD YOUR SHARES IN “STREET NAME” THROUGH A BANK, BROKERAGE FIRM OR OTHER NOMINEE, YOU SHOULD FOLLOW THE PROCEDURES PROVIDED BY YOUR BANK, BROKERAGE FIRM OR OTHER NOMINEE TO VOTE YOUR SHARES. IF YOU ATTEND THE 21CF SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

 

By Order of the Board of Directors,

Laura A. Cleveland

Vice President and Corporate Secretary

New York, New York

Dated: [●], 2018


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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Twenty-First Century Fox, Inc., which we refer to as 21CF, and The Walt Disney Company, which we refer to as Disney, from other documents that 21CF and Disney have filed with the U.S. Securities and Exchange Commission, which we refer to as the SEC, and that are contained in or incorporated by reference into this joint proxy statement/prospectus. For a listing of documents incorporated by reference into this joint proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and through the SEC’s website at www.sec.gov.

You may request copies of this joint proxy statement/prospectus and any of the documents incorporated by reference into this joint proxy statement/prospectus or other information concerning 21CF, without charge, by written or telephonic request directed to 21CF’s proxy solicitor, Okapi Partners LLC, 1212 Avenue of the Americas, 24th Floor, New York, New York 10036, Telephone (877) 274-8654.

You may also request a copy of this joint proxy statement/prospectus and any of the documents incorporated by reference into this joint proxy statement/prospectus or other information concerning Disney, without charge, by written or telephonic request directed to Disney’s proxy solicitor, Innisfree M&A Incorporated, 501 Madison Avenue, 20th Floor, New York, New York 10022, banks and brokers call collect: (212) 750-5833, stockholders call toll free: (877) 717-3923.

In order for you to receive timely delivery of the documents in advance of the special meeting of 21CF stockholders or Disney stockholders, as applicable, you must request the information no later than five business days prior to the date of the applicable special meeting (i.e., by []).

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by TWDC Holdco 613 Corp., a direct wholly owned subsidiary of Disney, which we refer to as New Disney (File No. 333-[●]), constitutes a prospectus of New Disney under Section 5 of the Securities Act of 1933, as amended, which we refer to as the Securities Act, with respect to the shares of common stock, par value $0.01 per share, of New Disney, which we refer to as New Disney common stock, to be issued to 21CF stockholders pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, by and among 21CF, Disney, New Disney, WDC Merger Enterprises I, Inc. and WDC Merger Enterprises II, Inc., as it may be amended from time to time, which we refer to as the combination merger agreement. This document also constitutes a joint proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. It also constitutes a notice of meeting with respect to the special meeting of 21CF stockholders and a notice of meeting with respect to the special meeting of Disney stockholders.

Disney has supplied all information contained or incorporated by reference into this joint proxy statement/prospectus relating to Disney, New Disney, WDC Merger Enterprises I, Inc. and WDC Merger Enterprises II, Inc., and 21CF has supplied all such information relating to 21CF, New Fox, Inc. and 21CF Distribution Merger Sub, Inc.

Disney and 21CF have not authorized anyone to provide you with information other than the information that is contained in, or incorporated by reference into, this joint proxy statement/prospectus. Disney and 21CF take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. This joint proxy statement/prospectus is dated [●], 2018, and you should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than such date.

 

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Further, you should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Disney stockholders or 21CF stockholders, nor the issuance by New Disney of shares of its common stock pursuant to the combination merger agreement will create any implication to the contrary.

Unless otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:

 

    “21CF” means Twenty-First Century Fox, Inc., a Delaware corporation;

 

    “21CF adjournment proposal” means the proposal to adjourn the 21CF special meeting, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes to approve the combination merger proposal, the distribution merger proposal or the 21CF charter amendment proposal;

 

    “21CF charter” means the Restated Certificate of Incorporation of 21CF;

 

    “21CF charter amendment proposal” means the proposal that 21CF stockholders approve an amendment to the 21CF charter to provide that the hook stock shares will not receive any consideration in connection with the distribution or the 21CF merger;

 

    “21CF common stock” means the 21CF class A common stock and the 21CF class B common stock;

 

    “21CF class A common stock” means the class A common stock, par value $0.01 per share, of 21CF;

 

    “21CF class B common stock” means the class B common stock, par value $0.01 per share, of 21CF;

 

    “21CF effective time” means 12:02 a.m. (New York City time) on the date immediately following the closing date, when the 21CF merger becomes effective;

 

    “21CF merger” means the merger of Wax Sub with and into 21CF, with 21CF surviving the merger and becoming a wholly owned subsidiary of New Disney;

 

    “21CF surviving company” means the surviving corporation in the 21CF merger;

 

    “average Disney stock price” means the volume weighted average trading price of Disney common stock on the NYSE over the 15 consecutive trading day period ending on the third trading day prior to the 21CF merger;

 

    “combination merger agreement” means the Amended and Restated Agreement and Plan of Merger, dated as of June 20, 2018, by among 21CF, Disney, New Disney, Delta Sub and Wax Sub, as may be amended from time to time, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

    “combination merger proposal” means the proposal that 21CF stockholders adopt the combination merger agreement;

 

    “compensation proposal” means the non-binding, advisory proposal to approve the compensation that may become payable to 21CF’s named executive officers in connection with the transactions;

 

    “Delta Sub” means WDC Merger Enterprises I, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney;

 

    “Disney” means The Walt Disney Company, a Delaware corporation;

 

    “Disney adjournment proposal” means the proposal to adjourn the Disney special meeting, if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal;

 

    “Disney common stock” means the common stock, par value $0.01 per share, of Disney;

 

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    “Disney effective time” means 12:01 a.m. (New York City time) on the date immediately following the closing date, when the Disney merger becomes effective;

 

    “Disney merger” means the merger of Delta Sub with and into Disney, with Disney surviving the merger and becoming a wholly owned subsidiary of New Disney;

 

    “Disney series A preferred stock” means the series A preferred stock, par value $0.01 per share, of Disney;

 

    “Disney stock” means the Disney common stock and the Disney series A preferred stock;

 

    “Disney surviving company” means the surviving corporation in the Disney merger;

 

    “distribution” means the distribution of all of the issued and outstanding common stock of New Fox to 21CF stockholders (other than holders that are subsidiaries of 21CF) on a pro rata basis pursuant to the distribution merger;

 

    “distribution merger” means the merger of Distribution Sub with and into 21CF, with 21CF surviving the merger;

 

    “distribution merger agreement” means the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of 21CF, as it may be amended from time to time, a copy of which is attached as Annex B to this joint proxy statement/prospectus;

 

    “distribution merger proposal” means the proposal that 21CF stockholders adopt the distribution merger agreement;

 

    “Distribution Sub” means 21CF Distribution Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of 21CF;

 

    “excluded shares” means (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law;

 

    “hook stock shares” means the shares of 21CF common stock held by subsidiaries of 21CF;

 

    “maximum cash amount” means $35.7 billion;

 

    “Merger Subs” means Delta Sub together with Wax Sub;

 

    “mergers” means the Disney merger together with the 21CF merger;

 

    “Nasdaq” means the Nasdaq Global Select Market;

 

    “New Disney” means TWDC Holdco 613 Corp., a Delaware corporation and a wholly owned subsidiary of Disney;

 

    “New Disney common stock” means the common stock, par value $0.01 per share, of New Disney;

 

    “New Disney series A preferred stock” means the series A preferred stock, par value $0.01 per share, of New Disney;

 

    “New Disney stock” means the New Disney common stock and the New Disney series A preferred stock;

 

    “New Fox” means New Fox, Inc., a Delaware corporation that is and, at all times prior to the distribution, will be a wholly owned subsidiary of 21CF;

 

    “New Fox business” means (1) 21CF’s “Television” segment (as described in 21CF’s June 30, 2017 Annual Report on Form 10-K), (2) the Fox News Channel, Fox Business Network, Big Ten Network and 21CF’s domestic national sports networks (including FS1, FS2, Fox Soccer 2Go, Fox Soccer Plus, Fox Deportes) and (3) HTS and Fox College Properties, including in each case any reasonable extensions thereof prior to the time of the separation;

 

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    “New Fox class A common stock” means the class A common stock, par value $0.01 per share, of New Fox;

 

    “New Fox class B common stock” means the class B common stock, par value $0.01 per share, of New Fox;

 

    “New Fox subsidiaries” means New Fox’s subsidiaries as designated in good faith by 21CF after consulting with Disney prior to the distribution taking into consideration the business conducted by such subsidiaries and the separation principles;

 

    “NYSE” means the New York Stock Exchange;

 

    “original combination merger agreement” means the Agreement and Plan of Merger, dated as of December 13, 2017, as amended by Amendment No. 1, dated as of May 7, 2018, among 21CF, Disney, TWC Enterprises 2 Corp. and TWC Merger Enterprises 1, LLC;

 

    “RemainCo” means 21CF after giving effect to the separation and the distribution;

 

    “retained business” means 21CF and its subsidiaries and the respective businesses thereof, other than the New Fox business;

 

    “retained subsidiaries” means the subsidiaries of 21CF, other than New Fox and the New Fox subsidiaries;

 

    “separation” means the internal restructuring whereby 21CF will transfer the New Fox business to New Fox and New Fox will assume from 21CF certain liabilities associated with the New Fox business;

 

    “share issuance proposal” means the proposal that Disney stockholders approve the issuance of New Disney common stock to 21CF stockholders in connection with the 21CF merger;

 

    “transactions” means the transactions contemplated by the combination merger agreement and the other transaction documents, including the separation, the distribution and the mergers; and

 

    “Wax Sub” means WDC Merger Enterprises II, Inc., a Delaware corporation and a wholly owned subsidiary of New Disney.

 

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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS AND THE SPECIAL MEETINGS

     1  

SUMMARY

     25  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF 21CF

     58  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF DISNEY

     60  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW DISNEY

     62  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF REMAINCO

     64  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW FOX

     66  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     68  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     69  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     73  

RISK FACTORS

     75  

RISK FACTORS RELATING TO THE TRANSACTIONS

     75  

RISK FACTORS RELATING TO NEW DISNEY FOLLOWING THE TRANSACTIONS

     88  

OTHER RISKS

     92  

INFORMATION ABOUT THE 21CF SPECIAL MEETING

     92  

INFORMATION ABOUT THE DISNEY SPECIAL MEETING

     98  

THE PARTIES TO THE TRANSACTIONS

     103  

THE TRANSACTIONS

     106  

THE COMBINATION MERGER AGREEMENT

     206  

THE VOTING AGREEMENTS

     250  

THE DISTRIBUTION MERGER AGREEMENT

     253  

DESCRIPTION OF FINANCING

     256  

INTERESTS OF 21CF’S DIRECTORS AND EXECUTIVE OFFICERS IN THE TRANSACTIONS

     257  

INTERESTS OF DISNEY’S DIRECTORS AND EXECUTIVE OFFICERS IN THE TRANSACTIONS

     262  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW DISNEY

     263  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF REMAINCO

     279  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW FOX

     296  

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     307  

DESCRIPTION OF NEW DISNEY CAPITAL STOCK

     311  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     315  

APPRAISAL RIGHTS OF 21CF STOCKHOLDERS

     328  

LEGAL MATTERS

     334  

EXPERTS

     335  

STOCKHOLDER PROPOSALS

     336  

21CF PROPOSAL NO. 1—APPROVAL OF THE COMBINATION MERGER PROPOSAL

     337  

21CF PROPOSAL NO. 2—APPROVAL OF THE DISTRIBUTION MERGER PROPOSAL

     338  

21CF PROPOSAL NO. 3—CHARTER AMENDMENT PROPOSAL

     339  

21CF PROPOSAL NO. 5—NON-BINDING, ADVISORY VOTE ON TRANSACTIONS-RELATED COMPENSATION FOR 21CF’S NAMED EXECUTIVE OFFICERS

     340  

DISNEY PROPOSAL NO. 1—APPROVAL OF ISSUANCE OF NEW DISNEY STOCK

     345  

21CF PROPOSAL NO. 4 AND DISNEY PROPOSAL NO. 2—ADJOURNMENT OF THE SPECIAL MEETINGS TO SOLICIT ADDITIONAL PROXIES

     346  

HOUSEHOLDING OF PROXY MATERIALS

     347  

WHERE YOU CAN FIND MORE INFORMATION

     348  

 

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Annex A

  Amended and Restated Agreement and Plan of Merger, dated as of June  20, 2018, by and among Twenty-First Century Fox, Inc., The Walt Disney Company, TWDC Holdco 613 Corp., WDC Merger Enterprises I, Inc. and WDC Merger Enterprises II, Inc.      A-1  

Annex B

  Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between Twenty-First Century Fox, Inc. and 21CF Distribution Merger Sub, Inc.      B-1  

Annex C

  Amended and Restated Voting Agreement, dated as of June 20, 2018, by and among the Murdoch Family Trust, Cruden Financial Services LLC and The Walt Disney Company      C-1  

Annex D

  Voting and Proxy Agreement, dated as of June 20, 2018, by and among TWDC Holdco 613 Corp., Cruden Financial Services LLC and the Murdoch Family Trust      D-1  

Annex E

  Certificate of Amendment to Amended and Restated Certificate of Incorporation of Twenty-First Century Fox, Inc.      E-1  

Annex F

  Opinion of Goldman Sachs & Co. LLC      F-1  

Annex G

  Opinion of Centerview Partners LLC      G-1  

Annex H

  Opinion of Guggenheim Securities, LLC      H-1  

Annex I

  Opinion of J.P. Morgan Securities LLC      I-1  

Annex J

  Delaware General Corporation Law, Section 262      J-1  

 

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS AND THE SPECIAL MEETINGS

The following questions and answers are intended to briefly address some commonly asked questions regarding the transactions, and matters to be addressed at the special meetings. These questions and answers may not address all questions that may be important to Disney stockholders and 21CF stockholders. Please refer to the section entitled “Summary” beginning on page [●] of this joint proxy statement/prospectus and the more detailed information contained elsewhere in this joint proxy statement/prospectus, the annexes to this joint proxy statement/prospectus and the documents referred to in this joint proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What are the proposed transactions?

 

A: Disney and 21CF have agreed to a merger under the terms of the combination merger agreement that are described in this joint proxy statement/prospectus. If the requisite stockholder approvals are obtained and the other conditions to closing under the combination merger agreement are satisfied or waived, the transactions will be effected as follows:

 

    On the date that is as soon as reasonably practicable, and in no event later than the third business day, after the day on which the last of the conditions to the closing of the transactions is satisfied or waived (other than those conditions that by their nature must be satisfied or waived at the closing of the transactions, but subject to the fulfillment or waiver of such conditions), 21CF will cause to become effective an amendment to the 21CF charter, which amendment will provide that holders of the hook stock shares will not receive any consideration in connection with the distribution or the 21CF merger.

 

    Immediately following the effectiveness of the 21CF charter amendment, 21CF will complete the separation, pursuant to the separation agreement, whereby it will transfer to New Fox a portfolio of 21CF’s news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network and certain other assets, and New Fox will assume from 21CF certain liabilities associated with such businesses. 21CF will retain all assets and liabilities not transferred to New Fox, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. For further details on the assets and liabilities to be transferred to New Fox, see below under “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus.

 

    On the day the separation is completed, following the separation but prior to the distribution, New Fox will pay to 21CF a dividend in the amount of $8.5 billion. New Fox will incur indebtedness sufficient to fund the dividend, which indebtedness will be reduced after the 21CF merger by the amount of the cash payment described below.

 

   

On the day the separation is completed, at 8:00 a.m. (New York City time), 21CF will distribute all of the issued and outstanding common stock of New Fox to 21CF stockholders (other than holders that are subsidiaries of 21CF) on a pro rata basis in accordance with terms set forth in the distribution merger agreement. Upon completion of the distribution, New Fox will be a standalone, publicly traded company. Pursuant to the distribution merger agreement, a portion of each share of 21CF common stock held at the time will be exchanged for 1/3 of one share of New Fox common stock of the same class, and holders will continue to own the remaining portion of each such share of 21CF common stock. On the day the distribution is completed, shares of 21CF common stock will continue to trade on Nasdaq. However, the total number of shares of 21CF common stock held, and the total number of shares of 21CF common stock outstanding, will be fewer than the number of shares of 21CF common stock held and the total number of shares of 21CF common stock outstanding prior to the distribution as a result of the exchange of a portion of each share for New Fox common stock. However, the

 

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proportionate ownership of each 21CF stockholder in 21CF (excluding the hook stock shares) will not change as a result of the distribution. For further detail, see the section entitled “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus.

 

    Following the completion of the distribution and immediately prior to the Disney effective time, New Disney shall cause its certificate of incorporation to contain provisions identical to the certificate of incorporation of Disney, shall cause its bylaws to contain provisions identical to the bylaws of Disney and shall reserve for issuance a sufficient number of shares of New Disney common stock to permit the issuance of shares of New Disney stock to Disney and 21CF stockholders in accordance with the combination merger agreement.

 

    Starting at 12:01 a.m. (New York City time) on the date immediately following the distribution, two mergers will occur. First, at 12:01 a.m. (New York City time) Delta Sub will be merged with and into Disney, and Disney will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class. At the Disney effective time, New Disney will be renamed “The Walt Disney Company”. Second, at 12:02 a.m. (New York City time) on the same date, Wax Sub will be merged with and into 21CF, and 21CF will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of 21CF common stock issued and outstanding immediately prior to the completion of the 21CF merger (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for the 21CF merger consideration.

 

    Following the Disney effective time, Disney common stock will be delisted from the NYSE, deregistered under the Exchange Act, and cease to be publicly traded. It is anticipated that shares of New Disney common stock will simultaneously be listed on the NYSE under the symbol “DIS”. Following the 21CF effective time, 21CF common stock will be delisted from Nasdaq, deregistered under the Exchange Act and cease to be publicly traded.

 

    At the open of business on the business day immediately following the date of the distribution, if the final estimate of the transaction tax is lower than $8.5 billion, Disney will make a cash payment to New Fox, which we refer to as the cash payment, which cash payment will be the amount obtained by subtracting the amount of the transaction tax from $8.5 billion, up to a maximum cash payment of $2 billion.

 

Q: What will Disney stockholders receive if the Disney merger is completed?

 

A: If the Disney merger is completed, each share of Disney common stock issued and outstanding immediately prior to the completion of the Disney merger will be converted into one validly issued, fully paid and non-assessable share of New Disney common stock.

 

Q: What will 21CF stockholders receive in the 21CF merger?

 

A:

If the transactions are completed, each share of 21CF common stock issued and outstanding immediately prior to the completion of the 21CF merger (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for, at the election of the holder thereof and subject to automatic proration and adjustment as described below, consideration, which we refer to as the 21CF merger consideration, payable in either cash, which we refer to as the 21CF cash consideration, or New Disney common stock, which we refer to as the 21CF stock consideration. See the section entitled “The

 

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  Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus.

Following the separation, upon consummation of the distribution and prior to the completion of the 21CF merger, 21CF will distribute all of the issued and outstanding common stock of New Fox to the holders of the outstanding shares of 21CF common stock (other than holders of the hook stock shares) on a pro rata basis in accordance with terms set forth in the distribution merger agreement. See the section entitled “The Transactions—Overview of the Transactions—Distribution” beginning on page [●] of this joint proxy statement/prospectus.

Each hook stock share will be unaffected by the 21CF merger and will remain outstanding. See the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus. The hook stock shares will not participate in the distribution of New Fox common stock.

 

Q: What is the value of the 21CF merger consideration?

 

A: The value of the 21CF merger consideration, which we refer to as the per share value, may fluctuate with the market price of Disney common stock and, subject to the collar on the exchange ratio, will be determined based on the average Disney stock price. Subject to the election, proration and adjustment procedures set forth in the combination merger agreement, each share of 21CF common stock will be exchanged for the per share value, payable in cash or shares of New Disney common stock, calculated as follows before giving effect to the tax adjustment amount (as defined below):

per share value = (50.0% * $38.00) + (50.0% * average Disney stock price * exchange ratio)

The number of shares of New Disney common stock to be delivered in exchange for each share of 21CF common stock to 21CF stockholders electing to receive 21CF stock consideration will be equal to the per share value divided by the average Disney stock price.

The 21CF merger consideration may be subject to the tax adjustment amount, which would be based on the final estimate of the transaction tax. The 21CF merger consideration was set based on an estimate of $8.5 billion for the transaction tax, and will be adjusted immediately prior to the consummation of the transactions if the final estimate of the transaction tax at closing is more than $8.5 billion or less than $6.5 billion. Such adjustment could increase or decrease the 21CF merger consideration, depending upon whether the final estimate is lower or higher, respectively, than $6.5 billion or $8.5 billion. Additionally, if the final estimate of the tax liabilities is lower than $8.5 billion, Disney will make a cash payment to New Fox reflecting the difference between such amount and $8.5 billion, up to a maximum cash payment of $2 billion. See the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” on page [●] of this joint proxy statement/prospectus.

As described in the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus, it is likely that the final estimate of the tax liabilities taken into account will differ materially from the amount estimated for purposes of setting the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. Because of the tax adjustment amount, the value of the 21CF merger consideration cannot be determined until immediately prior to completion of the 21CF merger. In addition, the value of the 21CF merger consideration that 21CF stockholders receive may depend on the price per share of Disney common stock at the time of the 21CF merger, which will not be known at the time of the special meetings and which may be less than the current price at the time of the special meetings. There will be no true-up payment by New Disney or New Fox if the actual amount of such tax liabilities paid by New Disney is more or less than the final estimate of such tax liabilities reflected in the tax adjustment amount and/or cash payment (subject to a limited exception for taxes attributable to certain divestitures, as described below in the section entitled “The Combination Merger Agreement—Other Agreements—Tax Matters Agreement”). See the section entitled “The Transactions—Sensitivity Analysis”

 

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beginning on page [●] of this joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the transaction tax and the average Disney stock price.

Assuming an average Disney stock price of $103.926, which was the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018, and assuming that the tax adjustment amount is zero, the 21CF merger consideration represented an implied value of $38.00 per share, and holders of 21CF common stock would receive pursuant to the 21CF merger, subject to proration, $38.00 in cash per share of 21CF common stock for which a cash election is made, and 0.3656 shares of New Disney common stock for each share of 21CF common stock for which a stock election is made. The implied value of the 21CF merger consideration will fluctuate with the market price of Disney common stock to the extent the average Disney stock price is greater than $114.32 or less than $93.53. 21CF class A common stock and 21CF class B common stock are currently traded on Nasdaq under the symbol “FOXA” and “FOX”, respectively, and Disney common stock is currently traded on the New York Stock Exchange under the symbol “DIS”. The average Disney stock price will not be known at the time of the special meetings and may be different than the current price or the price at the time of the special meetings. We encourage you to obtain current market quotes for 21CF common stock and Disney common stock before you determine how to vote on the proposals set forth in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What is the exchange ratio?

 

A: The exchange ratio is a component of the per share value, which determines the amount of 21CF merger consideration that each 21CF stockholder will be entitled to receive for each share of 21CF common stock such 21CF stockholder holds. The exchange ratio is established in accordance with the combination merger agreement and may be fixed or floating pursuant to a collar based on the average Disney stock price. Subject to the tax adjustment amount described below and elsewhere in this joint proxy statement/prospectus, the exchange ratio in the combination merger agreement will be determined as follows: (i) if the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324, (ii) if the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to (x) $38.00 divided by (y) the average Disney stock price or (iii) if the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063. The midpoint of this collar, $103.926, was set based on the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018.

 

Q: What is the per share value after giving effect to the tax adjustment amount?

 

A: The 21CF merger consideration may be subject to an adjustment based on an estimate of certain tax liabilities arising from the separation and distribution and other transactions contemplated by the combination merger agreement. See the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus. We refer to such adjustment as the tax adjustment amount. The tax adjustment amount will be calculated as follows:

tax adjustment amount = equity adjustment amount ÷ 1,877,000,000.

The equity adjustment amount, which may be positive or negative, represents the dollar amount by which the final estimate of the transaction tax at closing differs from the $8.5 billion estimate of the transaction tax that was used to set the 21CF merger consideration, net of the cash payment (as defined below), if any, and is calculated as follows:

equity adjustment amount = ($8.5 billion) - (amount of the transaction tax) - (amount of the cash payment, if any).

 

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The calculation of the tax adjustment amount divides the equity adjustment amount by 1,877,000,000 in order to calculate the portion of the equity adjustment amount to be borne by each share of 21CF common stock. 1,877,000,000 represents an estimate of the fully diluted number of shares of 21CF common stock outstanding as of June 18, 2018. The tax adjustment amount will be positive if the amount of the transaction tax is less than $6.5 billion, and will be negative if the amount of the transaction tax is greater than $8.5 billion. The tax adjustment amount will be zero if the transaction tax is between $6.5 billion and $8.5 billion because the cash payment will offset the difference between the amount of the transaction tax and $8.5 billion. After giving effect to the tax adjustment amount, which may be negative or positive, the per share value will be calculated as follows:

per share value = [50.0% * ($38.00 + tax adjustment amount)] + {50.0% * average Disney stock price * [exchange ratio + (tax adjustment amount ÷ $103.926)]}.

The tax adjustment amount that is applied to the stock component of the per share value is divided by $103.926, which is the reference price per share of Disney common stock used to set the exchange ratio, in order to translate the tax adjustment amount into a number that represents a fraction of a share of Disney common stock. The $103.926 reference price per share of Disney common stock represents the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018. The reference price for this purpose is fixed, and will not change based on the price of Disney common stock.

The transaction tax is an amount that will be estimated by Disney and 21CF to equal the sum of (a) the amount of taxes, subject to certain exceptions, imposed on 21CF and its subsidiaries as a result of the separation and distribution, (b) an amount in respect of divestiture taxes, as described in further detail in the section entitled “The Combination Merger Agreement—Tax Matters—Divestiture Taxes” beginning on page [●] of this joint proxy statement/prospectus and (c) the amount of taxes imposed on 21CF and its subsidiaries as a result of the operations of the New Fox business from and after January 1, 2018 through the closing of the transactions, but only to the extent such taxes exceed an amount of cash, which will not be less than zero, equal to the New Fox cash amount, as described in further detail in the section entitled “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus. See the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus for a more detailed discussion of the transaction tax calculation. See the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the transaction tax and the average Disney stock price.

 

Q: What will 21CF stockholders receive if the separation and distribution are completed? What will be the value of New Fox common stock?

 

A: Following the separation, upon consummation of the distribution and prior to the completion of the 21CF merger, 21CF will distribute all of the issued and outstanding shares of common stock of New Fox to the holders of the outstanding shares of 21CF common stock (other than the hook stock shares) on a pro rata basis in accordance with terms set forth in the distribution merger agreement. Following completion of the distribution, each 21CF stockholder (other than holders of the hook stock shares) will hold ownership interests in New Fox and 21CF proportionately equal to its existing ownership interest in 21CF (excluding the hook stock shares). In the distribution, a portion of each share of 21CF common stock will be exchanged for 1/3 of one share of New Fox common stock of the same class, and the remaining portion of such share of 21CF common stock will be unaffected. The 21CF merger consideration will be adjusted such that each portion of a share of 21CF common stock resulting from the distribution will receive the amount of 21CF merger consideration that a whole share of 21CF common stock would have been entitled to receive before giving effect to the distribution.

 

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As an example of the distribution adjustment, assume the following:

 

    a distribution multiple of 1.25 (5/4);

 

    a per share value after giving effect to the tax adjustment amount of $38.00; and

 

    an example 21CF stockholder who owns 120 shares of 21CF common stock.

In this example, 20% (1/5) of each share of 21CF common stock (other than hook stock shares) will be exchanged in the distribution for 1/3 of one share of New Fox common stock of the same class. The remaining 80% (4/5) of each share of 21CF common stock will be unaffected by the distribution and remain issued and outstanding until the 21CF merger. Following the distribution, the example 21CF stockholder will have, in the aggregate, 8 shares of New Fox common stock of the same class as its 21CF shares, and 96 shares of 21CF common stock, which 21CF shares will remain issued and outstanding until the 21CF merger. The 21CF merger consideration will be adjusted to take the distribution into account by multiplying the per share value, after giving effect to the tax adjustment amount, of $38.00 in this example by the distribution adjustment multiple, resulting in per share consideration of $47.50. Multiplying this by the example 21CF stockholder’s 96 shares results in total consideration to the example 21CF stockholder in the 21CF merger of $4,560.00. This is the same amount of consideration that the example 21CF stockholder would have received if its original aggregate total of 120 shares of 21CF common stock had been exchanged for $38.00 per share.

For more information, see the sections entitled “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus and “The Transaction—Overview of the Transaction; Distribution Adjustment” beginning on page [●] of this joint proxy statement/prospectus.

It is difficult to accurately determine what the value of shares of New Fox common stock may be or predict the prices at which shares of New Fox common stock may trade after consummation of the transactions. In the event that the conditions to the 21CF merger are not satisfied or waived for any reason, the separation and distribution will not occur.

 

Q: As a 21CF stockholder, am I guaranteed to receive the form of merger consideration I elect to receive for my shares of 21CF common stock?

 

A: No. Under the combination merger agreement, New Disney and Disney will deliver an aggregate of $35.7 billion in cash to 21CF stockholders pursuant to the 21CF merger (before giving effect to the tax adjustment amount). In order to deliver this aggregate cash amount, the combination merger agreement provides for pro rata adjustments to and reallocation of the cash and stock elections made by 21CF stockholders, as well as the allocation of consideration to be paid with respect to shares of 21CF common stock owned by 21CF stockholders who fail to make an election, which we refer to as no election shares. No election shares will be exchanged for the 21CF cash consideration, the 21CF stock consideration or a combination of both. Accordingly, depending on the elections made by other 21CF stockholders, each 21CF stockholder who elects to receive New Disney common stock for all of their shares in the 21CF merger may receive a portion of their consideration in cash, and each 21CF stockholder who elects to receive cash for all of their shares in the 21CF merger may receive a portion of their consideration in New Disney common stock. For further information, see the section entitled “The Combination Merger Agreement—The Mergers; Effect of the Mergers” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What happens to the per share value if the market price of shares of 21CF common stock or Disney common stock changes before the closing of the transactions?

 

A: If the average Disney stock price is between $93.53 and $114.32, then the per share value before giving effect to the tax adjustment amount will be fixed at $38.00. If the average Disney stock price is greater than $114.32 or less than $93.53, then the per share value will increase or decrease, respectively.

 

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The per share value that 21CF stockholders receive may depend on the average Disney stock price at the 21CF effective time. That average Disney stock price will not be known at the time of the special meeting and may be different from the current price or the price at the time of the special meetings. The per share value will not change based on changes to the market price of 21CF common stock.

 

Q: What is the value of the Disney merger consideration?

 

A: Each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class. Accordingly, the value of each share of New Disney stock will be the same as one share of Disney stock.

 

Q: What happens if I am eligible to receive a fraction of a share of New Disney common stock as part of the 21CF merger consideration?

 

A: If the aggregate number of shares of New Disney common stock, if any, that you are entitled to receive as 21CF merger consideration includes a fraction of a share of New Disney common stock, you will receive cash in lieu of that fractional share. See the section entitled “The Combination Merger Agreement—Fractional Shares” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What happens if I am eligible to receive a fraction of a share of New Fox common stock in connection with the distribution?

 

A: 21CF stockholders will receive cash in lieu of any fractional shares of New Fox they otherwise would have been entitled to receive in connection with the distribution. See the section entitled “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What happens to the portions of a share of 21CF common stock that I will hold following the distribution?

 

A: In the distribution, a portion of each share of 21CF common stock that you hold at the time will be exchanged for 1/3 of one share of New Fox common stock of the same class, and you will continue to own the remaining portion of each such share of 21CF common stock. On the day the distribution is completed, shares of 21CF common stock will continue to trade on Nasdaq. However, the total number of shares of 21CF common stock you hold, and the total number of shares of 21CF common stock outstanding, will be fewer than the number of shares of 21CF common stock you held and the total number of shares of 21CF common stock outstanding prior to the distribution as a result of the exchange of a portion of each share for New Fox common stock. The remaining portion of a share you will continue to own will represent the same proportionate ownership in 21CF that was represented by a whole share of 21CF common stock prior to the distribution. Accordingly, the proportionate ownership of each 21CF stockholder in 21CF (excluding the hook stock shares) will not change as a result of the distribution.

The exchange of a portion of each share of 21CF common stock for New Fox common stock as described above will not have any effect on the total amount of 21CF merger consideration you receive for your shares of 21CF common stock in the 21CF merger. The 21CF merger consideration will be automatically adjusted to take into account the exchange of a portion of each share for New Fox common stock, such that the remaining portion of each share will be entitled to the full amount of the 21CF merger consideration.

As an example of the distribution adjustment, assume the following:

 

    a distribution multiple of 1.25 (5/4);

 

    a per share value after giving effect to the tax adjustment amount of $38.00; and

 

    an example 21CF stockholder who owns 120 shares of 21CF common stock.

 

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In this example, 20% (1/5) of each share of 21CF common stock (other than hook stock shares) will be exchanged in the distribution for 1/3 of one share of New Fox common stock of the same class. The remaining 80% (4/5) of each share of 21CF common stock will be unaffected by the distribution and remain issued and outstanding until the 21CF merger. Following the distribution, the example 21CF stockholder will have, in the aggregate, 8 shares of New Fox common stock of the same class as its 21CF shares, and 96 shares of 21CF common stock, which 21CF shares will remain issued and outstanding until the 21CF merger. The 21CF merger consideration will be adjusted to take the distribution into account by multiplying the per share value, after giving effect to the tax adjustment amount, of $38.00 in this example by the distribution adjustment multiple, resulting in per share consideration of $47.50. Multiplying this by the example 21CF stockholder’s 96 shares results in total consideration to the example 21CF stockholder in the 21CF merger of $4,560.00. This is the same amount of consideration that the example 21CF stockholder would have received if its original aggregate total of 120 shares of 21CF common stock had been exchanged for $38.00 per share.

See the sections entitled “The Distribution Merger Agreement” beginning on page [●] of this joint proxy statement/prospectus and “The Transactions—Overview of the Transactions—Distribution Adjustment” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: How will the mergers be financed?

 

A: Disney and New Disney expect to fund the aggregate 21CF cash consideration upon completion of the mergers through the issuance of senior unsecured notes and/or commercial paper. Such contemplated financing is backstopped by a 364-day unsecured bridge term loan facility to be provided by a five bank syndicate totaling $35.7 billion. The receipt of financing by Disney and New Disney is not a condition to completion of the mergers and, accordingly, Disney and New Disney will be required to complete the mergers (assuming that all of the conditions to its obligations under the combination merger agreement are satisfied) whether or not debt financing is available at all or on acceptable terms. See the section entitled “Description of Financing” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: Disney is holding a special meeting of its stockholders to ask its stockholders to consider and vote on the share issuance proposal and the Disney adjournment proposal.

21CF is holding a special meeting of its stockholders to ask its stockholders to consider and vote on (i) the combination merger proposal, (ii) the distribution merger proposal, (iii) the 21CF charter amendment proposal, (iv) the 21CF adjournment proposal and (v) the compensation proposal.

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by New Disney, constitutes a prospectus of New Disney for the shares of New Disney common stock to be issued to 21CF stockholders under the combination merger agreement. This joint proxy statement/prospectus also constitutes a joint proxy statement for both Disney and 21CF. It also constitutes a notice of meeting for the Disney special meeting and a notice of meeting for the 21CF special meeting. This joint proxy statement/prospectus, including its annexes, contains important information about the transactions and the special meetings. Disney stockholders and 21CF stockholders should read this information carefully and in its entirety. The enclosed voting materials allow Disney stockholders and 21CF stockholders to vote their shares without attending the applicable special meeting in person.

 

Q: Does my vote matter?

 

A: Yes. The transactions cannot be completed unless Disney stockholders approve the share issuance proposal and 21CF stockholders approve the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal. Under Section 251(g) of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, Disney stockholder adoption of the combination merger agreement is not required.

 

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If holders of shares of Disney common stock are present at the Disney special meeting but do not vote for, or vote to abstain on, the share issuance proposal, this will have the same effect as a vote “AGAINST” the share issuance proposal. If holders of Disney common stock fail to submit a valid proxy or vote in person at the Disney special meeting, or do not provide their bank, brokerage firm or other nominee with instructions, as applicable, this will not have an effect on the vote to approve the share issuance proposal. The board of directors of Disney, which we refer to as the Disney board, recommends that Disney stockholders vote “FOR” the approval of the share issuance proposal.

If holders of shares of 21CF common stock fail to submit a valid proxy or vote in person at the 21CF special meeting, or vote to abstain, or do not provide their bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the approval of the combination merger proposal and the distribution merger proposal. In addition, if holders of shares of 21CF class B common stock fail to submit a valid proxy or vote in person at the 21CF special meeting, or vote to abstain, or do not provide their bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the approval of the 21CF charter amendment proposal. Holders of shares of 21CF class A common stock are not entitled to vote on the 21CF charter amendment proposal. The board of directors of 21CF, which we refer to as the 21CF board, recommends that 21CF stockholders vote “FOR” the approval of the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal.

 

Q: What is the vote required to approve each proposal at the Disney special meeting?

 

A: Approval of the share issuance proposal and the Disney adjournment proposal require the affirmative vote of holders of a majority of the shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote at the meeting. If your shares of Disney common stock are present at the Disney special meeting but are not voted on the share issuance proposal or the Disney adjournment proposal, or if you vote to abstain on the share issuance proposal or the Disney adjournment proposal, each will have the effect of a vote “AGAINST” the share issuance proposal and the Disney adjournment proposal, as applicable. If you fail to submit a valid proxy and to attend the Disney special meeting or if your shares of Disney common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Disney common stock, your shares of Disney common stock will not be voted, but this will not have an effect on the vote to approve the share issuance proposal or the Disney adjournment proposal.

If you participate in the Disney Savings and Investment Plan or the Disney Hourly Savings and Investment Plan, you may give voting instructions as to the number of shares of Disney common stock you hold in the plan as of the record date for the Disney special meeting, which we refer to as the Disney record date. You may provide voting instructions to Fidelity Management Trust Company by voting online or by completing and returning a proxy card if you received one. If you hold shares of Disney common stock other than through these plans and you vote electronically, voting instructions you give with respect to your other shares of Disney common stock will be applied to Disney stock credited to your accounts in a savings and investment plan unless you request a separate control number with respect to each account. To receive separate control numbers, please call 1-855-449-0994. The trustee will vote your shares of Disney common stock in accordance with your duly executed instructions received by [●], 2018. If you do not send instructions, an independent fiduciary has been selected to determine how to vote all shares for which the trustee does not receive valid and timely instructions from participants. You may revoke previously given voting instructions by [●], 2018 by either revising your instructions online or by submitting to the trustee either a written notice of revocation or a properly completed and signed proxy card bearing a later date. Your voting instructions will be kept confidential by the trustee.

See the section entitled “Information About the Disney Special Meeting—Vote Required” beginning on page [●] of this joint proxy statement/prospectus.

 

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Q: What is the vote required to approve each proposal at the 21CF special meeting?

 

A: Approval of the combination merger proposal and the distribution merger proposal require the affirmative vote of holders of a majority of the outstanding shares of 21CF class A common stock and 21CF class B common stock entitled to vote thereon, voting together as a single class. Because the affirmative votes required to approve the combination merger proposal and the distribution merger proposal are based on the total number of outstanding shares of 21CF class A common stock and 21CF class B common stock, if you fail to submit a valid proxy or vote in person at the 21CF special meeting, or vote to abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the combination merger proposal and the distribution merger proposal.

Approval of the 21CF charter amendment proposal requires the affirmative vote of holders of a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon. Because the affirmative vote required to approve the 21CF charter amendment proposal is based on the total number of outstanding 21CF class B common stock, if you hold shares of 21CF class B common stock and you fail to submit a valid proxy or vote in person at the 21CF special meeting, or vote to abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the 21CF charter amendment proposal.

Approval of the 21CF adjournment proposal and the compensation proposal require the affirmative vote of a majority of the votes cast thereon by holders of 21CF class B common stock entitled to vote thereon. If you vote to abstain or if you fail to submit a valid proxy or to vote in person at the 21CF special meeting or if your shares of 21CF class B common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of 21CF class B common stock, your shares of 21CF class B common stock will not be voted, but this will not have an effect on the vote on the 21CF adjournment proposal or the compensation proposal.

See the section entitled “Information About the 21CF Special Meeting—Vote Required” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: How does the Disney board recommend that Disney stockholders vote?

 

A: The Disney board unanimously recommends that Disney stockholders vote “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal. See the section entitled “The Transactions—Recommendation of the Disney Board; Disney’s Reasons for the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: How does the 21CF board recommend that 21CF stockholders vote?

 

A: The 21CF board recommends that 21CF stockholders vote “FOR” the combination merger proposal, “FOR” the distribution merger proposal, “FOR” the 21CF charter amendment proposal, “FOR” the 21CF adjournment proposal and “FOR” the compensation proposal. See the section entitled “The Transactions—Recommendation of the 21CF Board; 21CF’s Reasons for the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: Will the hook stock shares affect what I receive in the transactions?

 

A: No. The hook stock shares will not have any effect on the value of the consideration that will be received by the 21CF public stockholders in the transactions. The hook stock shares comprise 123,687,371 shares of 21CF class A common stock and 356,993,807 shares of 21CF class B common stock. The hook stock shares will be unaffected by the 21CF merger and will remain outstanding following the 21CF effective time as shares of 21CF common stock.

 

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Q: Will proxies be resolicited once the distribution has been effected and the final estimate of the transaction tax has been calculated?

 

A: No. Neither 21CF nor Disney will resolicit votes from their respective stockholders once the distribution has been effected, the final estimate of the transaction tax has been made and the tax adjustment amount (if any) has been calculated.

 

Q: Will 21CF or Disney request updated opinions from their respective financial advisors once the distribution has been effected and the final estimate of the transaction tax has been calculated?

 

A: No. Neither 21CF nor Disney intends to request updated opinions from their respective financial advisors based on the outcome of the distribution and the final estimate of the transaction tax. As a result, the opinions do not and will not address the fairness, from a financial point of view, of the 21CF merger consideration at the time the transactions are completed or at any time other than the dates of such opinions. For a description of the opinions received by the 21CF board and the Disney board from their respective financial advisors and a summary of the material financial analyses provided to the 21CF board or the Disney board, as applicable, in connection with such opinions, see “The Transactions—Opinions of 21CF’s Financial Advisors” beginning on page [●] of this joint proxy statement/prospectus and “The Transactions—Opinions of Disney’s Financial Advisors” beginning on page [●] of this joint proxy statement/prospectus, respectively.

 

Q: What will holders of 21CF equity compensation awards receive in the transactions?

 

A: In connection with the transactions, 21CF equity compensation awards will be adjusted and converted in the manner described in the section entitled “Interests of 21CF’s Directors and Executive Officers in the Transactions—Equity Compensation Awards” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What will holders of Disney equity compensation awards receive in the transactions?

 

A: In connection with the transactions, Disney equity compensation awards will be converted into equivalent New Disney awards. For further details, see the section entitled “The Combination Merger Agreement—Treatment of Disney Equity Compensation Awards in the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What equity stake will 21CF stockholders and Disney stockholders hold in New Disney immediately following completion of the transactions?

 

A: Based on the number of issued and outstanding shares of Disney common stock and 21CF common stock as of June 18, 2018, and based on the minimum and maximum potential exchange ratios of 0.3324 and 0.4063, respectively, and assuming that the tax adjustment amount is zero, 21CF stockholders will hold approximately 17-20% and Disney stockholders will hold approximately 80-83% of the issued and outstanding shares of New Disney common stock immediately following the closing of the mergers. The exact number of shares of New Disney common stock that will be issued in the 21CF merger will not be determined until the exchange ratio is determined, the tax adjustment amount is established and the number of outstanding shares of 21CF common stock, restricted share units, performance stock units and deferred stock units that will vest at the effective time of the 21CF merger is known, which will not be determined until the date of the 21CF merger is known.

 

Q: What is the expected timing and order of each of the material steps of the transactions, including the expected completion of the transactions?

 

A:

The 21CF special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●] and the Disney special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●]. The transactions will not be effected unless

 

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  and until each of the closing conditions described under the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus, including the approval of the share issuance proposal by Disney stockholders at the Disney special meeting and the approval of the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal by 21CF stockholders at the 21CF special meeting, has been satisfied or waived.

If such closing conditions are satisfied or waived, the material events that form part of the transactions will be effected as follows:

 

    On the date that is as soon as reasonably practicable, and in no event later than the third business day, after the day on which the last of the conditions to the closing of the transactions is satisfied or waived (other than those conditions that by their nature must be satisfied or waived at the closing of the transactions, but subject to the fulfillment or waiver of such conditions), the following transactions will be effected in the order described below:

 

    The 21CF charter amendment will be effected.

 

    Immediately following the effectiveness of the 21CF charter amendment, the separation will be completed.

 

    Following the separation but prior to the distribution, New Fox will pay the dividend to 21CF.

 

    At 8:00 a.m. (New York City time) the distribution will be effected. Both 21CF and New Fox will trade on a national securities exchange as independent companies on the date of the distribution.

 

    Following the close of trading on this date, the tax adjustment amount, if any, will be calculated.

 

    Following the completion of the distribution and immediately prior to the Disney effective time, New Disney shall cause its certificate of incorporation to contain provisions identical to the certificate of incorporation of Disney, shall cause its bylaws to contain provisions identical to the bylaws of Disney and shall reserve for issuance a sufficient number of shares of New Disney common stock to permit the issuance of shares of New Disney stock to Disney and 21CF stockholders in accordance with the combination merger agreement

 

    At the Disney effective time, Delta Sub will merge with and into Disney, and Disney will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class.

 

    Immediately following the Disney merger, at the 21CF effective time, Wax Sub will merge with and into 21CF, and 21CF will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of 21CF common stock issued and outstanding immediately prior to the completion of the 21CF merger (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for the 21CF merger consideration.

 

    Following the Disney effective time, Disney common stock will be delisted from the NYSE, deregistered under the Exchange Act and cease to be publicly traded. It is anticipated that shares of New Disney common stock will simultaneously be listed on the NYSE under the symbol “DIS”. Following the 21CF effective time, 21CF common stock will be delisted from Nasdaq, deregistered under the Exchange Act and cease to be publicly traded.

 

    At the open of business on the business day immediately following the date of the distribution, Disney will pay to New Fox the cash payment, if any.

Subject to the satisfaction or waiver of the closing conditions as described above, Disney and 21CF expect that the transactions will be completed within 6-12 months after June 20, 2018. However, it is possible that

 

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factors outside the control of both companies could result in the transactions being completed at a different time or not at all.

 

Q: Why do Disney and 21CF expect that the transactions will be completed within 6-12 months after June 20, 2018?

 

A: As described in the sections entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” and “The Transactions—Regulatory Approvals” beginning on pages [●] and [●], respectively, of this joint proxy statement/prospectus, completion of the transactions is conditioned on, among other things, (i) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii) receipt of any consents from the Federal Communications Commission, if required in connection with the completion of the transactions, and (iii) receipt of consents from regulators in more than a dozen non-U.S. jurisdictions. 21CF and Disney filed their notification and report forms under the HSR Act on February 1, 2018 and received a second request on March 5, 2018. Based on our engagement with the various U.S. and non-U.S. regulators to date, we continue to expect that transactions will be completed within 6-12 months after June 20, 2018.

 

Q: What are the material United States federal income tax consequences of the distribution to 21CF stockholders?

 

A: The U.S. federal income tax consequences of the receipt by 21CF stockholders of New Fox common stock in the distribution are uncertain. A distribution undertaken in connection with an acquisition where cash comprises a substantial portion of the aggregate consideration can prevent the distribution from qualifying as tax-free as a result of the “anti-device” requirement under Section 355 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code. The determination of whether the distribution can satisfy such requirement is complex, inherently factual in nature, and subject to significant uncertainty because the law is unclear. As a result, counsel cannot opine that the distribution will be tax-free to 21CF stockholders under Section 355 of the Code. Although New Disney intends to report the distribution as taxable to 21CF stockholders, 21CF stockholders will not be prohibited from taking a contrary position. 21CF stockholders are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the distribution to them. For purposes of deciding how to vote, 21CF stockholders should assume that the distribution does not qualify as a distribution described in Section 355 of the Code and will therefore be a fully taxable transaction, with the consequences that each U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus) who receives New Fox common stock in the distribution will generally recognize taxable gain or loss equal to the difference between the fair market value of the New Fox common stock received by the stockholder in the distribution and its tax basis in the portion of its shares of 21CF common stock exchanged therefor.

A more detailed discussion of the material United States federal income tax consequences of the distribution can be found in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What are the material United States federal income tax consequences of the 21CF merger to 21CF stockholders?

For U.S. federal income tax purposes, the mergers, taken together, are intended to qualify as a transaction described in Section 351 of the Code. It is a condition to 21CF’s obligation to complete the transactions that 21CF receive an opinion of its counsel, Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to as Skadden, to the effect that the mergers, taken together, will be treated as a transaction described in Section 351 of the Code. Accordingly, on the basis of such opinion:

 

    If a U.S. holder receives solely shares of New Disney common stock in exchange for shares of 21CF common stock in the 21CF merger, such holder will generally not recognize any gain or loss on such exchange.

 

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    If a U.S. holder receives solely cash in exchange for its shares of 21CF common stock in the 21CF merger, such holder will generally recognize gain or loss on such exchange equal to the difference between the amount of cash received and such holder’s adjusted tax basis in such shares of 21CF common stock exchanged therefor.

 

    If a U.S. holder receives a combination of New Disney common stock and cash in exchange for its shares of 21CF common stock in the 21CF merger, such holder will generally recognize gain, but not loss, on such exchange equal to the lesser of: (1) the excess of (a) the sum of the fair market value of the New Disney common stock and the amount of cash received over (b) such U.S. holder’s tax basis in the 21CF common stock surrendered in exchange therefor, and (2) the amount of cash received by such stockholder in the 21CF merger.

A more detailed discussion of the material United States federal income tax consequences of the 21CF merger can be found in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What are the material United States federal income tax consequences of the Disney merger to Disney stockholders?

 

A: For U.S. federal income tax purposes, the mergers, taken together, are intended to qualify as a transaction described in Section 351 of the Code. It is a condition to Disney’s obligation to complete the transaction that Disney receive an opinion of its counsel, Cravath, Swaine & Moore LLP, which we refer to as Cravath, to the effect that the mergers, taken together, will be treated as a transaction described in Section 351 of the Code. Accordingly, on the basis of such opinion, a U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus) of Disney common stock who exchanges such common stock for New Disney common stock in the Disney merger will not recognize any gain or loss on such exchange. A more detailed discussion of the material United States federal income tax consequences of the Disney merger can be found in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What are the conditions to completion of the transactions?

 

A: In addition to the approval of the share issuance proposal by Disney stockholders and the approval of the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal by 21CF stockholders as described above, completion of the transactions is subject to the satisfaction or, to the extent permitted by applicable law, waiver of a number of other conditions, including the receipt of required regulatory approvals, the accuracy of Disney’s and 21CF’s respective representations and warranties under the combination merger agreement (subject to certain materiality exceptions) and Disney’s and 21CF’s performance of their respective obligations under the combination merger agreement. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the transactions, see the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: What happens if the transactions are not completed?

 

A:

If the share issuance proposal is not approved by Disney stockholders, or any of the combination merger proposal, the distribution merger proposal or the 21CF charter amendment proposal are not approved by 21CF stockholders or the conditions to the 21CF merger are not satisfied or waived for any other reason, the mergers will not occur and Disney and 21CF stockholders will continue to hold shares of Disney common stock and 21CF common stock, respectively. 21CF stockholders will not receive any consideration for their shares of 21CF common stock and the separation and distribution of New Fox will not occur. Instead, 21CF will remain an independent public company, Disney common stock will continue to be listed and traded on

 

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  the NYSE and registered under the Exchange Act, 21CF class A common stock and 21CF class B common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and Disney and 21CF will continue to file periodic reports with the SEC. Under specified circumstances, 21CF may be required to pay Disney a termination fee of $1.525 billion, or Disney may be required to pay 21CF a termination fee of $1.525 billion. If the transactions are not consummated under certain circumstances relating to the failure to obtain required regulatory approvals, or there is a final, non-appealable order preventing the transactions, in each case, relating to antitrust or communications laws, Disney may be required to pay 21CF a termination fee of $2.5 billion. See the section entitled “The Combination Merger Agreement—Termination of the Combination Merger Agreement—Termination Fees” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: Who can vote at the special meetings?

 

A: Disney Stockholders: All holders of record of Disney common stock as of the close of business on May 29, 2018, the Disney record date, are entitled to receive notice of, and to vote at, the Disney special meeting. Each holder of Disney common stock is entitled to cast one vote on each matter properly brought before the Disney special meeting for each share of Disney common stock that such holder owned of record as of the Disney record date.

21CF Stockholders: All holders of record of 21CF common stock as of the close of business on May 29, 2018, the record date for the 21CF special meeting, which we refer to as the 21CF record date, are entitled to receive notice of, and to vote at, the 21CF special meeting. Each holder of 21CF class B common stock is entitled to cast one vote on each matter properly brought before the 21CF special meeting for each share of 21CF class B common stock that such holder owned of record as of the 21CF record date. Each holder of 21CF class A common stock is entitled to cast one vote on the combination merger proposal and one vote on the distribution merger proposal for each share of 21CF class A common stock that such holder owned of record as of the 21CF record date. Holders of 21CF class A common stock are not entitled to vote on the 21CF charter amendment proposal, the 21CF adjournment proposal or the compensation proposal.

 

Q: When and where are the special meetings?

 

A: Disney Stockholders: The Disney special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●]. If you plan to attend the meeting, you must be a stockholder on the record date of May 29, 2018 and obtain an admission ticket in advance. Tickets will be available to registered and beneficial owners and (if permitted by Disney) up to one guest accompanying each registered or beneficial owner. You can print your own tickets and you must bring them to the meeting to gain access. Tickets can be printed by accessing Shareholder Meeting Registration at www.ProxyVote.com/Disney and following the instructions provided (you will need the 16 digit number included on your proxy card or voter instruction form). If you are unable to print your tickets, please contact Broadridge at 1-855-449-0994. Requests for admission tickets will be processed in the order in which they are received and must be submitted no later than 11:59 p.m. (Eastern Time) on [●], 2018. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. If you are attending the Disney special meeting in person, you will be required to present valid, government-issued photo identification, such as a driver’s license or passport, and an admission ticket to be admitted to the Disney special meeting. Large bags, backpacks, suitcases, briefcases, cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be required to enter through a security checkpoint before being granted access to the meeting. For additional information about the Disney special meeting, see the section entitled “Information About the Disney Special Meeting” beginning on page [●] of this joint proxy statement/prospectus.

21CF Stockholders: The 21CF special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●]. If you plan to attend the meeting, you must be a stockholder on the record date of May 29, 2018 and obtain an admission ticket in advance. Tickets will be available to registered and beneficial owners. You can print

 

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your own tickets and you must bring them to the meeting to gain access. Tickets can be printed by accessing Shareholder Meeting Registration at www.ProxyVote.com and following the instructions provided (you will need the 16 digit number included on your proxy card or voter instruction form). If you are unable to print your tickets, please contact the Corporate Secretary at 1-212-852-7000. Requests for admission tickets will be processed in the order in which they are received and must be submitted no later than 11:59 p.m. (Eastern Time) on [●], 2018. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. If you received your special meeting materials electronically and wish to attend the meeting, please follow the instructions provided for attendance. If you are attending the 21CF special meeting in person, you will be required to present valid, government-issued photo identification, such as a driver’s license or passport, and an admission ticket to be admitted to the 21CF special meeting. Large bags, backpacks, suitcases, briefcases, cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be required to enter through a security checkpoint before being granted access to the meeting. The security checkpoint will close ten minutes before the meeting begins. If you do not provide an admission ticket and government-issued photo identification or do not comply with the security procedures described above, you will not be admitted to the 21CF special meeting. For additional information about the 21CF special meeting, see the section entitled “Information About the 21CF Special Meeting” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: How will Disney stockholders receive the Disney merger consideration to which they are entitled?

 

A: At the Disney effective time, all certificates formerly representing shares of Disney stock and all book-entry accounts formerly representing any uncertificated shares of Disney stock will thereafter automatically represent an equivalent number of shares of New Disney stock, with no requirement to surrender Disney stock certificates or uncertificated shares of Disney stock.

 

Q: How will 21CF stockholders receive the 21CF merger consideration to which they are entitled?

 

A: If you hold physical share certificates of 21CF common stock, you will be sent a letter of transmittal promptly after the 21CF effective time describing how you may exchange your shares of 21CF common stock for the applicable 21CF merger consideration, and the exchange agent will forward to you, as applicable, the cash amount, the shares of New Disney common stock (or applicable evidence of ownership), and cash in lieu of any fractional share of New Disney common stock, to which you are entitled after receiving the proper documentation from you. If you hold your shares of 21CF common stock in uncertificated book-entry form, you are not required to take any specific actions to exchange your shares of 21CF common stock, and after the completion of the transactions, such shares will be automatically exchanged for the applicable 21CF merger consideration. For more information on the documentation you are required to deliver to the exchange agent, see the section entitled “The Combination Merger Agreement—Exchange and Payment Procedures” beginning on page [●] of this joint proxy statement/prospectus.

 

Q: Will shares of 21CF common stock continue to receive dividends?

 

A: Pursuant to the terms of the combination merger agreement, prior to the closing of the 21CF merger, 21CF may continue to declare a semiannual dividend of $0.18 per share. 21CF most recently declared a semi-annual dividend on February 6, 2018, in an amount equal to $0.18 per share of 21CF common stock, which was paid on April 18, 2018. All future 21CF dividends will remain subject to approval by the 21CF board.

 

Q: Will shares of New Disney common stock acquired by former 21CF stockholders pursuant to the 21CF merger receive a dividend?

 

A:

After the closing of the 21CF merger, as a holder of New Disney common stock, former 21CF stockholders will receive the same dividends on shares of New Disney common stock that all other holders of shares of

 

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  New Disney common stock will receive with any dividend record date that occurs after the 21CF effective time.

Prior to the closing of the mergers, Disney and 21CF will coordinate regarding the declaration and payment of dividends on 21CF common stock and New Disney common stock so that you will not receive dividends on shares of both 21CF common stock and New Disney common stock received in the transactions, or fail to receive any dividend on shares of 21CF common stock and New Disney common stock received in the mergers, in each case, in respect of the same portion of any calendar year.

Former 21CF stockholders who hold 21CF share certificates will not be entitled to be paid dividends otherwise payable on the shares of New Disney common stock into which their shares of 21CF common stock are exchangeable until they surrender their 21CF share certificates according to the instructions provided to them. Dividends will be accrued for these stockholders and they will receive the accrued dividends when they surrender their 21CF share certificates. Disney most recently paid a semi-annual dividend on January 11, 2018, in an amount equal to $0.84 per share of Disney common stock.

All future New Disney dividends will remain subject to approval by the New Disney board.

 

Q: Why are 21CF stockholders being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, the transactions-related executive compensation?

 

A: Under SEC rules, 21CF is required to seek a non-binding, advisory vote with respect to the transactions-related executive compensation.

 

Q: What will happen if 21CF stockholders do not approve this transactions-related executive compensation?

 

A: Approval of the transactions-related executive compensation is not a condition to completion of the transactions. The vote is an advisory vote and will not be binding on 21CF, Disney, New Disney, Wax Sub or Delta Sub. If the transactions are completed, the transactions-related executive compensation may be paid to 21CF’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if 21CF stockholders do not approve, by non-binding, advisory vote, the transactions-related executive compensation.

 

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A: If your shares of common stock are registered directly in your name with the transfer agent of Disney or 21CF, you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to vote or to grant a proxy for your vote directly to Disney or 21CF, respectively, or to a third party to vote at the applicable special meeting.

If your shares are held by a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares held in “street name”, and your bank, brokerage firm or other nominee is considered the stockholder of record with respect to those shares. Your bank, brokerage firm or other nominee will send you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the applicable special meeting; however, you may not vote these shares in person at the applicable special meeting unless you obtain a “legal proxy” from your bank, brokerage firm or other nominee that holds your shares, giving you the right to vote the shares at the applicable special meeting.

 

Q: If my shares of Disney common stock or 21CF common stock are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:

No. If your shares are held in the name of a bank, brokerage firm or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record

 

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  holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee. Your bank, brokerage firm or other nominee has discretionary authority to vote on “routine” proposals if you have not provided voting instructions. However, your bank, brokerage firm or other nominee is precluded from exercising voting discretion with respect to non-routine matters. All of the proposals to be voted on by Disney and 21CF stockholders are non-routine matters. As a result, if you do not provide voting instructions, your shares will not be voted on any proposal on which your bank, brokerage firm or other nominee does not have discretionary authority. This is often called a “broker non-vote.”

You should therefore provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares of Disney common stock or 21CF common stock, as applicable.

Please follow the voting instructions provided by your bank, brokerage firm or other nominee so that it may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to Disney or 21CF or by voting in person at your special meeting unless you first obtain a proxy from your bank, brokerage firm or other nominee.

 

Q: How many votes do I have?

 

A: Each Disney stockholder is entitled to one vote on each matter properly brought before the Disney special meeting for each share of Disney common stock held of record as of the Disney record date. As of the close of business on the Disney record date, there were 1,486,750,541 outstanding shares of Disney common stock.

Each holder of 21CF class B common stock is entitled to one vote on each matter properly brought before the 21CF special meeting for each share of 21CF class B common stock held of record as of the 21CF record date. As of the close of business on the 21CF record date, there were 798,520,953 outstanding shares of 21CF class B common stock. With respect to the combination merger proposal and distribution merger proposal, each holder of 21CF class A common stock is entitled to one vote for each share of 21CF class A common stock held of record as of the 21CF record date. As of the close of business on the 21CF record date, there were 1,054,032,541 outstanding shares of 21CF class A common stock. Holders of 21CF class A common stock are not entitled to vote on the 21CF charter amendment proposal, the 21CF adjournment proposal or the compensation proposal.

 

Q: What constitutes a quorum for the special meetings?

 

A: Disney Stockholders: The presence, in person or represented by proxy, of a majority of the votes entitled to be cast by the holders of Disney common stock entitled to vote at the Disney special meeting constitutes a quorum for the purposes of the Disney special meeting. Abstentions are considered for purposes of establishing a quorum. A quorum is necessary to transact business at the Disney special meeting. If a quorum does not attend any meeting, a minority of the Disney stockholders entitled to vote thereat, present in person or represented by proxy, may adjourn the meeting from time to time, without notice other than by announcement at the meeting, until a quorum is present or represented, unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting.

21CF Stockholders: The presence, in person or represented by proxy, of a majority of the votes entitled to be cast by the holders of 21CF common stock entitled to vote at the 21CF special meeting constitutes a quorum for the purposes of the 21CF special meeting. Because a separate vote of the 21CF class B common stock is required to approve the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal, the presence, in person or represented by proxy, of a majority of the votes entitled to be cast by the holders of 21CF class B common stock entitled to vote at the 21CF special meeting constitutes a quorum with respect to such proposals. No shares of 21CF common stock owned by 21CF subsidiaries are entitled to vote or be counted for quorum purposes. Abstentions are considered for purposes of establishing a quorum. A quorum is necessary to transact business at the 21CF special meeting. If a

 

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quorum does not attend any meeting, the chairman of the meeting or the holders of a majority of the votes entitled to be cast by the 21CF stockholders who are present in person or by proxy may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum shall be present, unless the adjournment is for more than 30 days or, after adjournment, a new record date is fixed for the adjourned meeting.

 

Q: How do Disney stockholders vote?

 

A: Stockholder of Record. If you are a Disney stockholder of record, you may have your shares of Disney common stock voted on the matters to be presented at the Disney special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by 11:59 p.m. (Eastern Time) on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the Disney special meeting and cast your vote there.

Beneficial Owner. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the Disney special meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee.

If you participate in the Disney Savings and Investment Plan or the Disney Hourly Savings and Investment Plan, you may give voting instructions as to the number of shares of Disney common stock you hold in the plan as of the Disney record date. You may provide voting instructions to Fidelity Management Trust Company by voting online or by completing and returning a proxy card if you received one. If you are a record holder of shares other than through these plans and you vote electronically, voting instructions you give with respect to those shares will be applied to Disney common stock credited to your accounts in a savings and investment plan unless you request a separate control number with respect to each account. To receive separate control numbers, please call 1-855-449-0994. The trustee will vote your shares in accordance with your duly executed instructions received by [●], 2018. If you do not send instructions, an independent fiduciary has been selected to determine how to vote all shares for which the trustee does not receive valid and timely instructions from participants. You may revoke previously given voting instructions by [●], 2018, by either revising your instructions online or by submitting to the trustee either a written notice of revocation or a properly completed and signed proxy card bearing a later date. Your voting instructions will be kept confidential by the trustee.

 

Q: How do 21CF stockholders vote?

 

A: Stockholder of Record. If you are a 21CF stockholder of record, you may have your shares of 21CF common stock voted on the matters to be presented at the 21CF special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by [●] on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

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    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the 21CF special meeting and cast your vote there.

Beneficial Owner. If you are a beneficial owner, please refer to the instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the 21CF special meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee.

 

Q: How can I change or revoke my vote?

 

A: Disney Stockholders: You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the Disney special meeting and voting in person or by giving written notice of revocation to Disney prior to the time the Disney special meeting begins. Written notice of revocation should be mailed to: The Walt Disney Company, Attention: Secretary, 500 South Buena Vista Street, Burbank, California 91521. If you have instructed a broker, bank or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, broker or other nominee to change those instructions.

21CF Stockholders: You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the 21CF special meeting and voting in person or by giving written notice of revocation to 21CF prior to the time the 21CF special meeting begins. Written notice of revocation should be mailed to: Twenty-First Century Fox, Inc., Attention: Corporate Secretary, 1211 Avenue of the Americas, New York, New York 10036. If you have instructed a bank, brokerage firm or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, brokerage firm or other nominee to change those instructions.

 

Q: If a stockholder gives a proxy, how are the shares of common stock voted?

 

A: Disney Stockholders: Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Disney common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Disney common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the Disney special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of Disney common stock should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal.

21CF Class A Stockholders: Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of 21CF class A common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of 21CF class A common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on the combination merger proposal and the distribution merger proposal.

If you properly sign your proxy card but do not mark the boxes showing how your shares of 21CF class A common stock should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the combination merger proposal and “FOR” the distribution merger proposal.

21CF Class B Stockholders: Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of 21CF class B common stock in the way that you indicate.

 

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When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of 21CF class B common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the 21CF special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of 21CF class B common stock should be voted on a matter, the shares represented by your properly signed proxy will be voted “FOR” the combination merger proposal, “FOR” the distribution merger proposal, “FOR” the 21CF charter amendment proposal, “FOR” the 21CF adjournment proposal and “FOR” the compensation proposal.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your shares in more than one brokerage account, if you hold shares directly as a holder of record and also in “street name,” or otherwise through another holder of record, and in certain other circumstances. In addition, if you are a holder of record of shares of both Disney common stock and 21CF common stock, you will receive one or more separate proxy cards or voting instruction cards for each company. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your shares are voted.

 

Q: What if I hold shares of common stock in both Disney and 21CF?

 

A: If you are a stockholder of both Disney and 21CF, you will receive two separate packages of proxy materials. A vote cast as a Disney stockholder will not count as a vote cast as a 21CF stockholder, and a vote cast as a 21CF stockholder will not count as a vote cast as a Disney stockholder. Therefore, please separately submit a proxy for each of your Disney and 21CF shareholdings.

 

Q: What happens if I sell my shares of common stock before the special meeting?

 

A: Disney Stockholders: The Disney record date is earlier than the date of the Disney special meeting. If you transfer your shares of Disney common stock after the Disney record date but before the Disney special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the Disney special meeting.

21CF Stockholders: The 21CF record date is earlier than both the date of the 21CF special meeting and the 21CF effective time. If you transfer your shares of 21CF common stock after the 21CF record date but before the 21CF special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the 21CF special meeting but will transfer the right to receive the 21CF merger consideration to the person to whom you transfer your shares. In order to receive the 21CF merger consideration, you must hold your shares at the 21CF effective time.

 

Q: Who will solicit and pay the cost of soliciting proxies?

 

A: Disney Stockholders: Disney has engaged Innisfree M&A Incorporated, which we refer to as Innisfree, to assist in the solicitation of proxies for the Disney special meeting. Disney estimates that it will pay Innisfree a fee of approximately $50,000. Disney has agreed to reimburse Innisfree for certain out-of-pocket fees and expenses and also will indemnify Innisfree against certain losses, claims, damages, liabilities or expenses. Disney also may reimburse banks, brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Disney common stock. Disney’s directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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21CF Stockholders: 21CF has engaged Okapi Partners LLC, which we refer to as Okapi, to assist in the solicitation of proxies for the 21CF special meeting. 21CF estimates that it will pay Okapi a fee of approximately $25,000. 21CF has agreed to reimburse Okapi for certain out-of-pocket fees and expenses and also will indemnify Okapi against certain losses, claims, damages, liabilities or expenses. 21CF also may reimburse banks, brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of 21CF common stock. 21CF’s directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q: What do I need to do now?

 

A: Even if you plan to attend the Disney special meeting or the 21CF special meeting in person, after carefully reading and considering the information contained in this joint proxy statement/prospectus, please vote promptly to ensure that your shares are represented at the Disney special meeting or the 21CF special meeting, as applicable.

 

Q: If I hold physical share certificates representing my shares of common stock, should I send in my share certificates now?

 

A: 21CF Stockholders: No, please do NOT return your share certificate(s) with your proxy. If the 21CF merger is completed, and you hold physical share certificates in respect of your shares of 21CF common stock, you will be sent a letter of transmittal promptly after the 21CF effective time describing how you may exchange your shares of 21CF common stock for the 21CF merger consideration.

Disney Stockholders: No. Please do NOT return your share certificate(s) with your proxy. If the Disney merger is completed, any certificates that formerly represented shares of Disney common stock will, following the Disney effective time, represent shares of New Disney common stock without any requirement to surrender such certificate.

 

Q: How do I elect the type of merger consideration that I prefer to receive?

 

A: Not less than 30 days prior to the anticipated 21CF effective time, an election form will be mailed to each 21CF stockholder that is a holder of record as of five business days prior to the mailing date. To elect to receive the 21CF cash consideration, the 21CF stock consideration or a combination of the two, you must indicate on the election form the number of shares of 21CF common stock (before giving effect to the distribution) with respect to which you elect to receive the 21CF cash consideration, the number of shares of 21CF common stock (before giving effect to the distribution) with respect to which you elect to receive the 21CF stock consideration. You must return the form in the pre-addressed, postage prepaid return envelope provided so that it is received no later than 5:00 p.m. (New York City time) on the business day that is three trading days prior to the closing of the mergers, which we refer to as the election deadline.

If you hold shares of 21CF common stock in “street name”, you should receive instructions from the bank, brokerage firm or other nominee that is holding your shares advising you of the procedures for making your election. If these instructions are not received, you should contact the bank, brokerage firm or other nominee holding your shares. Election forms must be returned to the broker, bank or nominee in time for it to respond prior to the election deadline.

 

Q: Can I make one election for some of my shares of 21CF common stock and another election for the rest?

 

A:

Yes. The election form will permit you to specify, among the shares of 21CF common stock you hold, (i) the number of shares of 21CF common stock for which you are electing to receive the 21CF cash consideration, (ii) the number of shares of 21CF common stock for which you are electing to receive the

 

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  21CF stock consideration or (iii) that you make no election. 21CF stockholders will make elections on the basis of the number of shares of 21CF common stock held by each stockholder before giving effect to the distribution.

 

Q: What if I do not make an election or my election form is not received before the election deadline?

 

A: If you do not submit a properly completed and signed election form to the exchange agent by the election deadline (or if you submit a properly completed election form indicating no election), then you will be deemed to have made no election and will therefore receive the 21CF cash consideration or the 21CF stock consideration or a combination of both, depending on the elections made by other 21CF stockholders (as described in the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers—Proration and Reallocation” beginning on page [●] of this joint proxy statement/prospectus), except with respect to shares as to which you have not voted in favor of the 21CF merger and validly demanded and perfected appraisal rights under Delaware law.

 

Q: Can I change my election after I submit an election form?

 

A: Yes. You may revoke your election of merger consideration with respect to all or a portion of your shares of 21CF common stock by delivering written notice of your revocation to the exchange agent prior to the election deadline. If you instructed a bank, brokerage firm or other nominee to submit an election for your shares, you must follow its directions for changing those instructions. In addition, any election of 21CF merger consideration you make will automatically be revoked if the combination merger agreement is terminated.

21CF stockholders will not be entitled to revoke or change their election following the election deadline. As a result, if you make an election, you will be unable to revoke your election or sell your shares of 21CF common stock during the period between the election deadline and the date of completion of the mergers.

 

Q: May I submit a consideration election form even if I vote against the 21CF merger?

 

A: Yes. You may submit an election form even if you vote against the combination merger proposal.

 

Q: May I transfer my shares of 21CF common stock once I have made an election?

 

A: Yes, however, for 21CF stockholders who have made an election, any further transfer of shares made on the stock transfer books of 21CF will be deemed to be a revocation of their election.

 

Q: Where can I find the voting results of the special meetings?

 

A: The preliminary voting results will be announced at the special meetings. In addition, within four business days following certification of their respective final voting results, Disney and 21CF intend to file their respective final voting results with the SEC on a Current Report on Form 8-K.

 

Q: Am I entitled to exercise appraisal rights?

 

A: Subject to the closing of the 21CF merger, 21CF stockholders who do not vote in favor of the adoption of the combination merger agreement and otherwise comply with the procedures and satisfy the conditions set forth in Section 262 of the DGCL are entitled to appraisal rights under Section 262 of the DGCL. For more information regarding appraisal rights, see the section entitled “Appraisal Rights of 21CF Stockholders” beginning on page [●] of this joint proxy statement/prospectus. In addition, a copy of Section 262 of the DGCL is attached as Annex J to this joint proxy statement/prospectus. Failure to strictly comply with Section 262 of the DGCL may result in your waiver of, or inability to, exercise appraisal rights.

 

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Disney stockholders are not entitled to appraisal rights in connection with the transactions.

 

Q: Are there any risks that I should consider in deciding how to vote?

 

A: Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page [●] of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors of Disney and 21CF contained in the documents that are incorporated by reference into this joint proxy statement/prospectus.

 

Q: Who can help answer any other questions I have?

 

A: Disney stockholders and 21CF stockholders who have questions about the transactions, the other matters to be voted on at the special meetings or how to submit a proxy, or who need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, should contact:

 

Disney Stockholders:

   21CF Stockholders:

Innisfree M&A Incorporated

   Okapi Partners LLC

501 Madison Avenue, 20th Floor

   1212 Avenue of the Americas, 24th Floor

New York, New York 10022

   New York, New York 10036

 

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SUMMARY

The following summary highlights selected information in this joint proxy statement/prospectus and may not contain all the information that may be important to you as a 21CF stockholder or a Disney stockholder. Accordingly, we encourage you to read carefully this entire joint proxy statement/prospectus, its annexes and the documents referred to in this joint proxy statement/prospectus. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page [] of this joint proxy statement/prospectus.

The Parties to the Transactions (Page [])

Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

Twenty-First Century Fox, Inc., a Delaware corporation, is a diversified global media and entertainment company with operations in four segments: Cable Network Programming, Television, Filmed Entertainment, and Other, Corporate and Eliminations. 21CF’s home page on the Internet is www.21cf.com. The information provided on 21CF’s website is not part of this joint proxy statement/prospectus and is not incorporated herein by reference.

21CF’s class A common stock and class B common stock is listed on Nasdaq, under the symbol “FOXA” and “FOX”, respectively.

New Fox, Inc.

c/o Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

New Fox, Inc., a wholly owned subsidiary of 21CF, is a Delaware corporation that was formed under the name of New Fox, Inc. on May 3, 2018 and whose shares will be distributed to 21CF stockholders (other than holders of the hook stock shares) pursuant to the terms and conditions of the distribution merger agreement. Following the completion of the separation, which is described further beginning on page [●] of this joint proxy statement/prospectus under the heading “The Combination Merger Agreement—Separation”, New Fox will be comprised of a portfolio of 21CF’s news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network, and certain other assets, and New Fox will assume from 21CF certain liabilities associated with such businesses. Upon completion of the distribution, New Fox will be a standalone, publicly traded company. Until the completion of the transactions, New Fox will not conduct any activities other than those incidental to its formation and the matters contemplated by the distribution merger agreement, including in connection with the separation and the distribution. 21CF intends to change the name of New Fox, Inc. prior to the distribution.



 

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21CF Distribution Merger Sub, Inc.

c/o Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

21CF Distribution Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of 21CF, was formed solely for the purpose of facilitating the distribution merger. Distribution Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the distribution merger, Distribution Sub will be merged with and into 21CF, with 21CF surviving the distribution merger.

The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

The Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. Disney’s home page on the Internet is www.thewaltdisneycompany.com. The information provided on Disney’s website is not part of this joint proxy statement/prospectus and is not incorporated herein by reference.

Disney’s common stock is listed on the NYSE, under the symbol “DIS”.

TWDC Holdco 613 Corp.

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

TWDC Holdco 613 Corp. is a Delaware corporation and a direct wholly owned subsidiary of Disney. New Disney was incorporated on June 14, 2018, solely for the purpose of effecting the mergers and, at the Disney effective time, New Disney will be renamed “The Walt Disney Company”. Pursuant to the combination merger agreement, (1) Delta Sub will merge with and into Disney and (2) Wax Sub will merge with and into 21CF. As a result of the mergers, Disney and 21CF will become wholly owned subsidiaries of New Disney. As a result of the transactions contemplated by the combination merger agreement, New Disney will become a publicly traded corporation, and former Disney stockholders and former 21CF stockholders will own stock in New Disney. New Disney has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement.

WDC Merger Enterprises I, Inc.

c/o The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

WDC Merger Enterprises I, Inc., a Delaware corporation and a wholly owned subsidiary of Disney, was formed on June 14, 2018, solely for the purpose of facilitating the Disney merger. Delta Sub has not carried on



 

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any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the Disney merger, Delta Sub will be merged with and into Disney, with Disney surviving the Disney merger as a wholly owned subsidiary of New Disney.

WDC Merger Enterprises II, Inc.

c/o The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

WDC Merger Enterprises II, Inc., a Delaware corporation and a wholly owned subsidiary of Disney, was formed on June 14, 2018, solely for the purpose of facilitating the 21CF merger. Wax Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the 21CF merger, Wax Sub will be merged with and into 21CF, with 21CF surviving the 21CF merger as a wholly owned subsidiary of New Disney.

The Transactions

The terms and conditions of the transactions are contained in the combination merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus, and the other transaction agreements. We encourage you to read the combination merger agreement carefully and in its entirety, as it is the principal document that governs the transactions. If the conditions set forth in the combination merger agreement are satisfied or waived, the following transactions will be consummated:

First, on the date that is as soon as reasonably practicable, and in no event later than the third business day, after the day on which the last of the conditions to the closing of the transactions is satisfied or waived (other than those conditions that by their nature must be satisfied or waived at the closing of the transactions, but subject to the fulfillment or waiver of such conditions), 21CF will cause to become effective an amendment to the 21CF charter, which amendment will provide that holders of the hook stock shares will not receive any consideration in connection with the distribution or the 21CF merger.

Second, immediately following the effectiveness of the 21CF charter amendment, 21CF will complete the separation, pursuant to the separation agreement, whereby it will transfer to New Fox a portfolio of 21CF’s news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network and certain other assets, and New Fox will assume from 21CF certain liabilities associated with such businesses. 21CF will retain all assets and liabilities not transferred to New Fox, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. For further details on the assets and liabilities to be transferred to New Fox, see below under “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus.

Third, on the day the separation is completed, following the separation but prior to the distribution, New Fox will pay to 21CF a dividend in the amount of $8.5 billion. New Fox will incur indebtedness sufficient to fund the dividend, which indebtedness will be reduced after the 21CF merger by the amount of the cash payment.

Fourth, on the day the separation is completed, at 8:00 a.m. (New York City time), 21CF will distribute all of the issued and outstanding common stock of New Fox to 21CF stockholders (other than holders that are



 

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subsidiaries of 21CF) on a pro rata basis in accordance with terms set forth in the distribution merger agreement. Upon completion of the distribution, New Fox will be a standalone, publicly traded company. Pursuant to the distribution merger agreement, a portion of each share of 21CF common stock held at the time will be exchanged for 1/3 of one share of New Fox common stock of the same class, and holders will continue to own the remaining portion of each such share of 21CF common stock. On the day the distribution is completed, shares of 21CF common stock will continue to trade on Nasdaq. However, the total number of shares of 21CF common stock held, and the total number of shares of 21CF common stock outstanding, will be fewer than the number of shares of 21CF common stock held and the total number of shares of 21CF common stock outstanding prior to the distribution as a result of the exchange of a portion of each share for New Fox common stock. However, the proportionate ownership of each 21CF stockholder in 21CF (excluding the hook stock shares) will not change as a result of the distribution. For further detail, see the section entitled “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus.

Fifth, following the completion of the distribution and immediately prior to the Disney effective time, New Disney shall cause its certificate of incorporation to contain provisions identical to the certificate of incorporation of Disney, shall cause its bylaws to contain provisions identical to the bylaws of Disney and shall reserve for issuance a sufficient number of shares of New Disney common stock to permit the issuance of shares of New Disney stock to Disney and 21CF stockholders in accordance with the combination merger agreement.

Sixth, starting at 12:01 a.m. (New York City time) on the date immediately following the distribution, two mergers will occur. First, at 12:01 a.m. (New York City time) Delta Sub will be merged with and into Disney, and Disney will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class. At the Disney effective time, New Disney will be renamed “The Walt Disney Company”. Second, at 12:02 a.m. (New York City time) on the same date, Wax Sub will be merged with and into 21CF, and 21CF will continue as the surviving corporation and become a wholly owned subsidiary of New Disney. Each share of 21CF common stock issued and outstanding immediately prior to the completion of the 21CF merger (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for the 21CF merger consideration. Following the Disney effective time, Disney common stock will be delisted from the NYSE, deregistered under the Exchange Act and cease to be publicly traded. Following the 21CF effective time, 21CF common stock will be delisted from Nasdaq, deregistered under the Exchange Act and cease to be publicly traded. It is anticipated that shares of New Disney common stock will be listed on the NYSE under the symbol “DIS” upon completion of the mergers.

Lastly, at the open of business on the business day immediately following the date of the distribution, Disney will pay to New Fox the cash payment, if any.



 

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The structure of Disney, New Disney and 21CF currently and immediately following the transactions is illustrated below:

Existing Structure(1)

 

 

LOGO             LOGO

 

(1) This chart is as of the date of this joint prospectus/proxy statement.
(2) The “covered stockholders” are the Murdoch Family Trust and Cruden Financial Services LLC, the corporate trustee of the Murdoch Family Trust, which are parties to the pre-closing voting agreement and the post-closing voting agreement.
(3) The hook stock shares are held by the following wholly-owned subsidiaries of 21CF (each of which will become a wholly-owned subsidiary of Disney as a result of the transactions): Karlholt US Sub Inc., Carlholt Investment US Sub Inc., TI US Sub Inc., Karlholt Australia Pty Ltd., Telegraph Investment Australia Pty Ltd. and Carlholt Investments Australia Pty Ltd.

Structure Immediately Following the Transactions

 

     LOGO    LOGO         


 

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Consideration for the 21CF Merger (Page [])

At the 21CF effective time, each issued and outstanding share of 21CF common stock (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for, at the election of the holder thereof and subject to automatic proration and adjustment contained in the combination merger agreement, the 21CF cash consideration or the 21CF stock consideration.

The value of the 21CF merger consideration may fluctuate with the average Disney stock price. Subject to the election, proration and adjustment procedures described below, each share of 21CF common stock will be exchanged for an amount, payable in cash or shares of New Disney common stock, equal to the per share value, without interest.

The per share value before giving effect to the tax adjustment amount, which may be positive or negative is calculated as follows:

per share value = (50.0% * $38.00) + (50.0% * average Disney stock price * exchange ratio)

The exchange ratio is established in accordance with the combination merger agreement and may be fixed or floating pursuant to a collar based on the average Disney stock price. The exchange ratio in the combination merger agreement will be determined as follows:

 

    if the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324;

 

    if the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to (i) $38.00 divided by (ii) the average Disney stock price; or

 

    if the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063.

The number of shares of New Disney common stock to be delivered in exchange for each share of 21CF common stock to 21CF stockholders electing to receive the 21CF stock consideration will be equal to the per share value divided by the average Disney stock price. Holders of 21CF common stock who make no election may receive the 21CF cash consideration, the 21CF stock consideration or a combination of the two in exchange for their shares, as more fully described in the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers—Proration and Reallocation” beginning on page [●] of this joint proxy statement/prospectus. Whether a 21CF stockholder makes a cash election, a stock election or no election, the value of the consideration that such stockholder receives as of the closing date of the 21CF merger will be approximately equivalent based on the average Disney stock price used to calculate the 21CF merger consideration.

After giving effect to the tax adjustment amount, the per share value will be calculated as follows:

per share value = [50.0% * ($38.00 + tax adjustment amount)] + {50.0% * average Disney stock price * [exchange ratio + (tax adjustment amount ÷ $103.926)]}.

The tax adjustment amount that is applied to the stock component of the per share value is divided by $103.926, which is the reference price per share of Disney common stock used to set the exchange ratio, in order to translate the tax adjustment amount into a number that represents a fraction of a share of Disney common stock. The $103.926 reference price per share of Disney common stock represents the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018. The reference price for this purpose is fixed, and will not change based on the price of Disney common stock.



 

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As described below under “The Combination Merger Agreement—The Mergers; Effects of the Mergers”, the 21CF merger consideration that 21CF stockholders will be entitled to receive for each share of 21CF common stock they hold may be subject to the tax adjustment amount, which is based on the transaction tax. The transaction tax is an amount that will be estimated by Disney and 21CF to equal the sum of (a) the amount of taxes (other than any hook stock taxes or taxes as a result of any hook stock elimination) imposed on 21CF and its subsidiaries as a result of the separation and distribution, which we refer to as spin taxes, (b) an amount in respect of divestiture taxes, as described in further detail in the section entitled “The Combination Merger Agreement—Tax Matters—Divestiture Taxes” beginning on page [●] of this joint proxy statement/prospectus and (c) the amount of taxes imposed on 21CF and its subsidiaries as a result of the operations of the New Fox business from and after January 1, 2018 through the closing of the transactions, but only to the extent such taxes exceed an amount of cash, which will not be less than zero, equal to the New Fox cash amount, as described in further detail in the section entitled “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus. See the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus for a more detailed discussion of the transaction tax calculation.

As described in the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●], it is likely that the final estimate of the tax liabilities taken into account will differ materially from $8.5 billion, which was used to set the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. Because of the tax adjustment amount, the amount of cash or shares of New Disney common stock that 21CF stockholders will receive in the 21CF merger cannot be determined until immediately prior to the completion of the 21CF merger. Each hook stock share will be unaffected by the 21CF merger and will remain outstanding as a share of common stock of 21CF. See the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the transaction tax and the average Disney stock price.

No fractional shares of New Disney common stock will be issued in the 21CF merger, and 21CF stockholders will receive cash in lieu of any fractional shares of New Disney common stock they otherwise would have been entitled to receive, in connection with the 21CF merger.

Distribution Adjustment

As described in the section entitled “The Combination Merger Agreement—21CF Charter Amendment and Distribution” beginning on page [●] of this joint proxy statement/prospectus, the 21CF merger consideration will be automatically adjusted to take into account the exchange of a portion of each share of 21CF common stock for 1/3 of one share of New Fox common stock of the same class, pursuant to the distribution, such that the portion of each share of 21CF common stock resulting from the distribution will receive the amount of 21CF merger consideration that a whole share of 21CF common stock would have been entitled to receive before giving effect to the distribution. To give effect to the distribution adjustment, the per share value, after giving effect to the tax adjustment amount, will be multiplied by the distribution adjustment multiple.

As an example of the distribution adjustment, assume the following:

 

    a distribution multiple of 1.25 (5/4);

 

    a per share value after giving effect to the tax adjustment amount of $38.00; and

 

    an example 21CF stockholder who owns 120 shares of 21CF common stock.

In this example, 20% (1/5) of each share of 21CF common stock (other than hook stock shares) will be exchanged in the distribution for 1/3 of one share of New Fox common stock of the same class. The remaining



 

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80% (4/5) of each share of 21CF common stock will be unaffected by the distribution and remain issued and outstanding until the 21CF merger. Following the distribution, the example 21CF stockholder will have, in the aggregate, 8 shares of New Fox common stock of the same class as its 21CF shares and 96 shares of 21CF common stock, which 21CF shares will remain issued and outstanding until the 21CF merger. The 21CF merger consideration will be adjusted to take the distribution into account by multiplying the per share value, after giving effect to the tax adjustment amount, of $38.00 in this example by the distribution adjustment multiple, resulting in per share consideration of $47.50. Multiplying this by the example 21CF stockholder’s 96 shares results in total consideration to the example 21CF stockholder in the 21CF merger of $4,560.00. This is the same amount of consideration that the example 21CF stockholder would have received if its original aggregate total of 120 shares of 21CF common stock had been exchanged for $38.00 per share.

See the section entitled “The Transactions—Distribution” beginning on page [●] of this joint proxy statement/prospectus.

Proration and Reallocation (Page [])

Under the combination merger agreement, New Disney and Disney will deliver an aggregate of $35.7 billion, plus fifty percent of the equity adjustment amount (if greater than zero), in cash to 21CF stockholders pursuant to the 21CF merger. In order to deliver this aggregate cash amount, the combination merger agreement provides for pro rata adjustments to, and reallocation of, the cash and stock elections made by 21CF stockholders, as well as the allocation of consideration to be paid with respect to no election shares. No election shares will be exchanged for the 21CF cash consideration, the 21CF stock consideration or a combination of both. Accordingly, depending on the elections made by other 21CF stockholders, each 21CF stockholder who elects to receive New Disney common stock for all of their shares in the 21CF merger may receive a portion of their consideration in cash, and each 21CF stockholder who elects to receive cash for all of their shares in the 21CF merger may receive a portion of their consideration in New Disney common stock.

If the elected cash consideration, which is the amount equal to the aggregate number of cash election shares multiplied by the per share value, exceeds the maximum cash amount, then:

 

    all stock election shares and all no election shares will be exchanged for the 21CF stock consideration; and

 

    a portion of the cash election shares of each 21CF stockholder will be exchanged for the 21CF cash consideration as follows, and the remaining portion of such stockholder’s cash election shares will be exchanged for the 21CF stock consideration:

cash election shares exchanged for 2ICF cash consideration = (number of such stockholder’s cash election shares) * [(maximum cash amount) ÷ (elected cash consideration)]

If the elected cash consideration is less than the maximum cash amount, which difference we refer to as the shortfall amount, then:

 

    all cash election shares will be exchanged for the 21CF cash consideration; and

 

    all stock election shares and no election shares will be treated in the following manner:

 

   

if the shortfall amount is less than or equal to the product of the aggregate number of no election shares and the per share value, which we refer to as the no election value, then (1) all stock election shares will be exchanged for the 21CF stock consideration and (2) a portion of the no election shares of each 21CF stockholder, calculated as follows, will be exchanged for the 21CF



 

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cash consideration as follows (and the remaining portion of such stockholder’s no election shares, if any, will be exchanged for the 21CF stock consideration):

no election shares exchanged for 21CF cash consideration = (number of no election shares of such stockholder) * [(shortfall amount) ÷ (no election value)]

 

    if the shortfall amount is more than the no election value, then (1) all no election shares will be exchanged for the 21CF cash consideration and (2) a portion of the stock election shares of each stockholder will be exchanged for the 21CF cash consideration as follows (and the remaining portion of such stockholder’s stock election shares will be exchanged for the 21CF stock consideration):

stock election shares exchanged for 21CF cash consideration = (number of stock election shares of such stockholder) * {(shortfall amount – no election value) ÷ [(aggregate number of stock election shares) * (the per share value)]}

If the elected cash consideration equals the maximum cash amount, then: (1) all cash election shares will be converted into the right to receive the 21CF cash consideration and (2) all stock election shares and all no election shares will be converted into the right to receive the 21CF stock consideration.

Consideration for the Disney Merger (Page [])

At the Disney effective time, each share of Disney stock issued and outstanding immediately prior to the Disney effective time will be converted into one share of New Disney stock of the same class, which we refer to as the Disney merger consideration, as specified in Section 251(g) of the DGCL. A description of the New Disney stock to be issued in connection with the mergers is set forth in the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers—Consideration for the Disney Merger” beginning on page [●] of this joint proxy statement/prospectus.

Consideration for the Distribution Merger (Page [])

Following completion of the distribution, each 21CF stockholder (other than holders of the hook stock shares) will hold ownership interests in New Fox and 21CF proportionately equal to its existing ownership interest in 21CF (excluding the hook stock shares). Pursuant to the terms of the distribution merger agreement, at the effective time of the distribution merger:

 

    as described in the table below, a portion of each share of 21CF class A common stock (other than the hook stock shares) will be exchanged for 1/3 of one share of New Fox class A common stock, and the remaining portion of such share of 21CF class A common stock not so exchanged will be unaffected by the distribution and will remain issued and outstanding until the 21CF merger, and

 

Portion of each share of 21CF class A common stock exchanged for one-third of one share of New Fox class A common stock:    Portion of a share of 21CF class A common stock that remains outstanding following the distribution:
= 1 – [1 ÷ (distribution adjustment multiple)]    = 1 – {1 – [1 ÷ (distribution adjustment multiple)]}


 

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    as described in the table below, a portion of each share of 21CF class B common stock (other than the hook stock shares) will be exchanged for 1/3 of one share of New Fox class B common stock, and the remaining portion of such share of 21CF class B common stock not so exchanged will be unaffected by the distribution and will remain issued and outstanding until the 21CF merger.

 

Portion of each share of 21CF class B common stock exchanged for 1/3 of one share of New Fox class B common stock:    Portion of a share of 21CF class B common stock that remains outstanding following the distribution:
= 1 – [1 ÷ (distribution adjustment multiple)]    = 1 – {(1 – [1 ÷ (distribution adjustment multiple)]}

The distribution adjustment multiple is calculated as follows: distribution adjustment multiple = (21CF’s fully diluted pre-distribution market capitalization) ÷ [(21CF’s fully diluted pre-distribution market capitalization) – (New Fox’s fully diluted when-issued market capitalization)]. For additional information on the distribution adjustment multiple, see the section entitled “The Transactions—Overview of the Transactions—Distribution Adjustment” beginning on page [●] of this joint proxy statement/prospectus.

Accordingly, following the completion of the distribution, each 21CF stockholder (other than holders of the hook stock shares) will own a portion of a share less for each share of 21CF common stock owned by such holder immediately prior to the distribution effective time. The proportionate ownership of each 21CF stockholder in 21CF (excluding the hook stock shares) will not change as a result of the distribution. The 21CF merger consideration will be automatically adjusted to take into account the exchange of a portion of each share of 21CF for New Fox common stock, such that the remaining portion of such 21CF common stock resulting from the distribution will receive the amount of 21CF merger consideration that a whole share of 21CF common stock would have been entitled to receive before giving effect to the distribution. See the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus. 21CF stockholders will receive cash in lieu of any portion of each share of New Fox common stock they otherwise would have been entitled to receive in connection with the distribution, and the portion of each share of 21CF common stock after completion of the distribution will remain issued and outstanding until the 21CF merger. For further information, see the section entitled “The Transactions—Overview of the Transaction—The Mergers, Effects of the Merger” beginning on page [●] of this joint proxy statement/prospectus and “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus.

 

Sky Acquisition (Page [])

21CF currently holds approximately 39% of the issued shares of Sky plc, which we refer to as Sky. In December 2016, 21CF issued an announcement disclosing the terms of 21CF’s all-cash offer for the approximately 61% interest in Sky not currently held by 21CF, which we refer to as the Sky acquisition, at a price of £10.75 per share, payable in cash, subject to certain payments of dividends.

The Sky acquisition has received unconditional clearance by all competent competition authorities including the European Commission, and has been cleared on public interest and plurality grounds in all of the markets in which Sky operates outside of the UK, including Austria, Germany, Italy and the Republic of Ireland. However, the Sky acquisition remains subject to approval by the UK Secretary of State for Digital, Culture, Media and Sport and the requisite approval of Sky shareholders unaffiliated with 21CF, as well as to certain other customary closing conditions.

In connection with the approval sought from the UK Secretary of State for Digital, Culture, Media and Sport, 21CF has undertaken to the Secretary of State to separate the Sky News business into a separate company,



 

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which we refer to as Sky News Newco, and to transfer the shares in Sky News Newco to Disney or to an alternative suitable third party if Disney did not complete its acquisition of Newco within a specified period, which we refer to as the Sky News Divestment. The Sky News Divestment is conditional upon the Sky acquisition completing. 21CF and Disney have agreed to provide financial support to the current level of funding (adjusted by cost inflation) and further possible capital expenditure to Sky News Newco for a period of 15 years after the Sky News Divestment such that the total funds available for Sky News, including the funding 21CF has undertaken to provide, is no less than £100 million per year for the next 15 years. Disney has undertaken to continue to operate Sky News for a period of 15 years after the Sky News Divestment and may only sell Sky News Newco with the approval of the Secretary of State. Disney and 21CF have undertaken that the Sky News Newco board of Directors shall consist of directors that are independent of 21CF, News Corp, any member of the Murdoch family or companies controlled by the Murdoch family. The Secretary of State has stated that he proposes to accept the undertakings provided by 21CF and Disney and, as is required, has published the undertakings for public consultation.

If the Sky acquisition is not completed by 21CF and another party has not acquired more than 50% of the ordinary shares of Sky, in each case prior to the completion of the transactions, New Disney will be required to make a mandatory offer for all the outstanding ordinary shares of Sky not already owned by 21CF. The U.K. Takeover Panel has previously ruled that such mandatory offer would be required to be at a price of £10.75 per share. The U.K. Takeover Panel has not made any revised ruling at this time.

On April 25, 2018, Comcast Corporation, which we refer to as Comcast, announced a pre-conditional cash offer for the fully diluted share capital of Sky at an offer price of £12.50 per Sky share, which we refer to as the Comcast Sky offer, which was subject to regulatory pre-conditions (which have now been satisfied) as well as additional closing conditions. Completion of the Sky acquisition is not a condition to either party’s obligation to consummate the transactions. For additional information about Disney’s obligation to make a mandatory offer for Sky in certain circumstances and the Comcast offer, see the section entitled “The Transactions—Sky Acquisition” beginning on page [●] of this joint proxy statement/prospectus.

Recommendation of the 21CF Board; 21CF’s Reasons for the Transactions (Page [])

After careful consideration, the 21CF board approved the combination merger agreement, the distribution merger agreement and the 21CF charter amendment and determined that the transactions contemplated thereby, including the 21CF merger, the distribution and the 21CF charter amendment, are advisable, fair to and in the best interests of 21CF and its stockholders. For the factors considered by the 21CF board in reaching its decision to approve the transactions to recommend the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal to 21CF stockholders, see the section entitled “The Transactions— Recommendation of the 21CF Board; 21CF’s Reasons for the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

Opinions of 21CF’s Financial Advisors (Page [])

Opinion of Goldman Sachs & Co. LLC

At a meeting of the 21CF board held on June 20, 2018, Goldman Sachs & Co. LLC, which we refer to as Goldman Sachs, delivered to the 21CF board its oral opinion, subsequently confirmed in writing, to the effect that, as of June 20, 2018, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the merger consideration to be paid to the 21CF stockholders (other than Disney and its affiliates), taken in the aggregate, pursuant to the combination merger agreement was fair from a financial point of view to such stockholders.

The full text of the written opinion of Goldman Sachs, dated June 20, 2018, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review



 

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undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex F. The summary of Goldman Sachs’ opinion contained in this joint proxy statement / prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the 21CF board in connection with its consideration of the transactions and the opinion does not constitute a recommendation as to how any 21CF stockholder should vote or make any election with respect to the transactions or any other matter.

For more information, see the section entitled “The Transactions—Opinions of 21CF’s Financial Advisors—Opinion of Goldman Sachs & Co. LLC” on page [●] and Annex F of this joint proxy statement/prospectus.

Opinion of Centerview Partners LLC

21CF retained Centerview Partners LLC, which we refer to as Centerview, as financial advisor in connection with the transactions contemplated by the combination merger agreement. In connection with this engagement, the 21CF board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of shares of 21CF class A common stock and 21CF class B common stock (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) the hook stock shares, (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law and (iv) shares held by Disney and its affiliates, which we refer to as Centerview evaluation excluded shares), taken in the aggregate, of the 21CF merger consideration proposed to be paid to such holders pursuant to the combination merger agreement. On June 20, 2018, Centerview rendered to the 21CF board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated June 20, 2018, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the merger consideration proposed to be paid to the holders of shares of 21CF common stock (other than Centerview evaluation excluded shares), taken in the aggregate, pursuant to the combination merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated June 20, 2018, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex G and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the 21CF board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transactions and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of shares of 21CF common stock (other than Centerview evaluation excluded shares), taken in the aggregate, of the merger consideration proposed to be paid to such holders pursuant to the combination merger agreement. Centerview’s opinion did not address any other term or aspect of the combination merger agreement or the transactions and does not constitute a recommendation to any 21CF stockholder or any other person as to how such stockholder or other person should vote with respect to the 21CF merger or otherwise act with respect to the transactions or any other matter, including, without limitation, whether such holder should elect to receive the 21CF cash consideration or the 21CF stock consideration, or make no election, in the transactions.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

For more information, see the section entitled “The Transactions—Opinions of 21CF’s Financial Advisors—Centerview Partners” on page [●] and Annex G of this joint proxy statement/prospectus.



 

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Recommendation of the Disney Board; Disney’s Reasons for the Transactions (Page [])

After careful consideration, the Disney board unanimously approved the combination merger agreement and the issuance of shares of New Disney stock to 21CF stockholders pursuant to the 21CF merger and determined that the combination merger agreement and the transactions contemplated thereby, including the mergers and the issuance of shares of New Disney stock to 21CF stockholders pursuant to the 21CF merger are advisable and in the best interests of Disney and its stockholders. For the factors considered by the Disney board in reaching its decision to approve the combination merger agreement and to recommend the share issuance proposal, see the section entitled “The Transactions—Recommendation of the Disney Board; Disney’s Reasons for the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

Opinions of Disney’s Financial Advisors (Page [])

Opinion of Guggenheim Securities, LLC

Disney retained Guggenheim Securities, LLC, which we refer to as Guggenheim Securities, as its financial advisor in connection with Disney’s potential acquisition of RemainCo. Guggenheim Securities delivered an opinion to the Disney board to the effect that, as of June 18, 2018, and based on and subject to the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the 21CF merger consideration to be paid by New Disney was fair, from a financial point of view, to Disney. The full text of Guggenheim Securities’ written opinion, which is attached as Annex H to this joint proxy statement/prospectus and which you should read carefully and in its entirety, is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion.

Guggenheim Securities’ opinion was provided to the Disney board (in its capacity as such) for its information and assistance in connection with its evaluation of the 21CF merger consideration. Guggenheim Securities’ opinion and any materials provided in connection therewith did not constitute a recommendation to the Disney board with respect to the mergers, nor does Guggenheim Securities’ opinion constitute advice or a recommendation to (i) any holder of Disney common stock or 21CF common stock as to how to vote or act in connection with the transactions or otherwise, (ii) any holder of 21CF common stock as to what form of 21CF merger consideration such holder should elect to receive pursuant to the cash/stock election mechanism in the combination merger agreement, (iii) any holder of 21CF common stock as to how to act in connection with Comcast’s publicly announced proposal dated June 13, 2018 to acquire RemainCo for $35.00 in cash per share of 21CF common stock, which we refer to as the June 13 Comcast proposal, or (iv) any holder of ordinary shares of Sky as to whether to tender such shares or as to how to otherwise act in connection with the Sky acquisition or the Comcast Sky offer. Guggenheim Securities’ opinion only addresses, as of the date of such opinion and to the extent expressly specified therein, the fairness, from a financial point of view, to Disney of the 21CF merger consideration to be paid by New Disney and does not address (x) any other term, aspect or implication of the transactions or the combination merger agreement (including, without limitation, the form or structure of the transactions (including the separation, the payment of the dividend, the distribution or the mergers) or the cash/stock election procedures, adjustments, limitations or prorationing mechanisms contemplated by the combination agreement), any voting agreement or any other agreement, transaction document or instrument contemplated by the combination merger agreement (including, without limitation, the separation agreement) to be entered into or amended in connection with the transactions or (y) the fairness, financial or otherwise, of (a) the transactions to, or of any consideration to be paid to or received by, the holders of any class of securities (other than as expressly specified in the opinion), creditors or other constituencies of Disney, 21CF, New Fox, Sky or New Disney or (b) the amount or nature of any compensation payable to or to be received by any of Disney’s, 21CF’s, New Fox’s, Sky’s or New Disney’s directors, officers or employees, or any class of such persons, in connection with the transactions or the Sky acquisition relative to the 21CF merger consideration or otherwise.



 

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For a description of the opinion that the Disney board received from Guggenheim Securities, see the section entitled “The Transactions—Opinions of Disney’s Financial Advisors—Guggenheim Securities” beginning on page [●] of this joint proxy statement/prospectus.

Opinion of J.P. Morgan Securities LLC

Disney retained J.P. Morgan Securities LLC, which we refer to as J.P. Morgan, as financial advisor in connection with the proposed transactions. At the meeting of the Disney board on June 18, 2018, J.P. Morgan rendered its oral opinion to the Disney board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the 21CF merger consideration was fair, from a financial point of view, to Disney. J.P. Morgan has confirmed its June 18, 2018 oral opinion by delivering its written opinion to the Disney board, dated June 18, 2018, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex I to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirely by reference to the full text of such opinion. You are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Disney board (in its capacity as such) in connection with and for the purposes of its evaluation of the transactions and was directed only to the 21CF merger consideration and did not address any other aspect of the transactions. J.P. Morgan expressed no opinion as to the fairness of the transactions or the combination merger agreement to, or any consideration to be received by, the holders of any class of securities, creditors or other constituencies of Disney or 21CF or as to the underlying decision by Disney to engage in the proposed transactions, or with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed transactions, or any class of such persons relative to the 21CF merger consideration or with respect to the fairness of any such compensation. The issuance of J.P. Morgan’s opinion was approved by a fairness opinion committee of J.P. Morgan. The opinion does not constitute a recommendation to any Disney stockholder as to how such stockholder should vote with respect to the mergers or any other matter.

For a description of the opinion that Disney’s board of directors received from J.P. Morgan, see the section entitled “The Transactions—Opinions of Disney’s Financial Advisors—J.P. Morgan” beginning on page [●] of this joint proxy statement/prospectus.

Information About the 21CF Special Meeting (Page [])

Time, Place and Purpose of the 21CF Special Meeting (Page [])

The 21CF special meeting will be held on [●], 2018, at [●]. (Eastern Time), at [●].

The transactions cannot be completed unless 21CF stockholders, voting together as a single class, approve the combination merger proposal and the distribution merger proposal, and the holders of 21CF class B common stock approve the 21CF charter amendment proposal.

Accordingly, at the 21CF special meeting, 21CF stockholders, voting together as a single class, will be asked to consider and vote on (i) the combination merger proposal and (ii) the distribution merger proposal. In addition, at the 21CF special meeting, holders of 21CF class B common stock will be asked to consider and vote on (i) the 21CF charter amendment proposal, (ii) the 21CF adjournment proposal and (iii) the compensation proposal.

Record Date and Quorum (Page [])

You are entitled to receive notice of, and to vote at, the 21CF special meeting if you are a 21CF stockholder of record as of the close of business on May 29, 2018, the 21CF record date. On the 21CF record date, there were



 

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798,520,953 shares of 21CF class B common stock outstanding held by approximately 6,504 holders of record and 1,054,032,541 shares of 21CF class A common stock outstanding held by approximately 28,977 holders of record.

Each holder of shares of 21CF class B common stock held as of the 21CF record date is entitled to one vote per share of 21CF class B common stock on all matters to be presented at the 21CF special meeting. Each holder of shares of 21CF class A common stock held as of the 21CF record date is entitled to one vote per share of 21CF class A common stock on the combination merger proposal and the distribution merger proposal but is not entitled to vote on any other proposal on account of its shares of 21CF class A common stock.

The presence, in person or represented by proxy, of a majority in voting power of all outstanding shares of 21CF common stock entitled to vote at the 21CF special meeting shall constitute a quorum for purposes of the combination merger proposal and the distribution merger proposal. The presence, in person or represented by proxy, of a majority in voting power of all outstanding shares of 21CF class B common stock entitled to vote at the 21CF special meeting shall constitute a quorum for purposes of the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal. Abstentions are considered for purposes of establishing a quorum. A quorum is necessary to transact business at the 21CF special meeting.

Additionally, the 21CF bylaws and the DGCL, provide that if a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum shall be present.

Vote Required (Page [])

Approval of the combination merger proposal and the distribution merger proposal require the affirmative vote of the holders of a majority of the outstanding shares of 21CF class A common stock and 21CF class B common stock, voting together as a single class. For adoption of the distribution merger proposal and the combination merger proposal, you may vote “FOR”, “AGAINST”, or “ABSTAIN”. Votes to abstain will not be counted as votes cast in favor of the adoption of the combination merger proposal or the distribution merger proposal, but will count for purposes of determining whether a quorum is present. If you fail to submit a valid proxy or to vote in person at the 21CF special meeting or if you vote to abstain in connection with combination merger proposal or distribution merger proposal, it will have the same effect as a vote “AGAINST” the combination merger proposal, or the distribution merger proposal, as applicable.

Approval of the 21CF charter amendment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon. For purposes of the 21CF charter amendment proposal, you may vote “FOR”, “AGAINST”, or “ABSTAIN”. For purposes of the votes on the 21CF charter amendment proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the 21CF charter amendment proposal, or if you vote to abstain on the 21CF charter amendment proposal, this will have the same effect as a vote “AGAINST” the 21CF charter amendment proposal. Votes to abstain will not be counted as votes cast in favor of the 21CF charter amendment proposal, but will count for purposes of determining whether a quorum is present. If you fail to submit a valid proxy or to vote in person at the 21CF special meeting or if you vote to abstain in connection with the 21CF charter amendment proposal, it will have the same effect as a vote “AGAINST” the 21CF charter amendment proposal.

Approval of the 21CF adjournment proposal requires the affirmative vote of a majority of votes cast thereon by the holders of shares of 21CF class B common stock entitled to vote thereon. For purposes of the 21CF adjournment proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the 21CF adjournment proposal, or if you fail to submit a proxy or to vote in person at the 21CF special meeting, as applicable, the shares of 21CF class B common stock held by your or your bank, brokerage



 

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firm or other nominee will not be counted in respect of, and will not have an effect on, the vote to adjourn the 21CF special meeting.

Approval of the compensation proposal requires the affirmative vote of a majority of votes cast thereon by holders of shares of 21CF class B common stock entitled to vote thereon. For purposes of the compensation proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the compensation proposal, or if you have given a proxy and abstained on the compensation proposal, or if you fail to submit a proxy or to vote in person at the 21CF special meeting, as applicable, the shares of 21CF class B common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have an effect on, the compensation proposal. Approval of this proposal is not a condition to completion of the transactions, and the vote with respect to this proposal is advisory only and will not be binding on 21CF, the 21CF surviving company, the Disney surviving company or Disney. If the transactions are completed, the transactions-related executive compensation may be paid to 21CF’s named executive officers to the extent payable in accordance with the terms of the compensation arrangements even if 21CF stockholders fail to approve, by non-binding, advisory vote, the transactions-related executive compensation.

Proxies and Revocations (Page [])

Stockholder of Record. If you are a 21CF stockholder of record, you may have your shares of 21CF common stock voted on matters presented at the 21CF special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by 11:59 p.m. (Eastern Time) on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the 21CF special meeting and cast your vote there.

Beneficial Owner. If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your 21CF common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the 21CF special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the 21CF special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of 21CF common stock should be voted on a matter, the shares of 21CF common stock represented by your properly signed proxy card will be voted “FOR” each of the proposals upon which you are entitled to vote.

You have the right to revoke a proxy, whether delivered over the internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the 21CF special meeting and voting in person, or by giving written notice of revocation to 21CF prior to the time the 21CF special meeting begins. Written notice of revocation should be mailed to: 21st Century Fox, Attention: Corporate Secretary, 1211 Avenue of the Americas, New York, New York 10036. If you have instructed a bank, brokerage firm or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, brokerage firm or other nominee to change those instructions.



 

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Information About the Disney Special Meeting (Page [])

Time, Place and Purpose of the Disney Special Meeting (Page [])

The Disney special meeting will be held on [●], 2018, at [●] (Eastern Time), at [●].

At the Disney special meeting, Disney stockholders will be asked to consider and vote on the share issuance proposal and the Disney adjournment proposal.

Record Date and Quorum (Page [])

You are entitled to receive notice of, and to vote at, the Disney special meeting if you are a stockholder of record of shares of Disney common stock as of the close of business on May 29, 2018, the Disney record date. On the Disney record date, there were 1,486,750,541 shares of Disney common stock outstanding and entitled to vote. You will have one vote on all matters properly coming before the Disney special meeting for each share of Disney common stock that you owned on the Disney record date.

The presence, in person or represented by proxy, of a majority of the votes entitled to be cast by holders of Disney common stock entitled to vote at the Disney special meeting constitutes a quorum for the purposes of the Disney special meeting. Abstentions are counted for purposes of establishing a quorum. A quorum is necessary to transact business at the Disney special meeting.

Additionally, the Disney bylaws provide that if a quorum does not attend any meeting, a minority of the Disney stockholders entitled to vote thereat, present in person or represented by proxy, may adjourn the meeting from time to time, without notice other than by announcement at the meeting, until a quorum is present or represented, unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting.

Vote Required (Page [])

Approval of the share issuance proposal and the Disney adjournment proposal require the affirmative vote of holders of a majority of the shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote at the meeting. If your shares of Disney common stock are present at the Disney special meeting but are not voted on the share issuance proposal or the Disney adjournment proposal, or if you vote to abstain on the share issuance proposal or the Disney adjournment proposal, each will have the effect of a vote “AGAINST” the share issuance proposal and the Disney adjournment proposal, as applicable. If you fail to submit a valid proxy or to attend the Disney special meeting or if your shares of Disney common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Disney common stock, your shares of Disney common stock will not be voted, but this will not have an effect on the vote to approve the share issuance proposal or the Disney adjournment proposal.

If you participate in the Disney Savings and Investment Plan or the Disney Hourly Savings and Investment Plan, you may give voting instructions as to the number of shares of Disney common stock you hold in the plan as of the Disney record date. You may provide voting instructions to Fidelity Management Trust Company by voting online or by completing and returning a proxy card if you received one. If you are a record holder of shares of Disney common stock other than through these plans and you vote electronically, voting instructions you give with respect to those shares of Disney common stock will be applied to Disney stock credited to your accounts in a savings and investment plan unless you request a separate control number with respect to each account. To receive separate control numbers, please call 1-855-449-0994. The trustee will vote your shares of Disney common stock in accordance with your duly executed instructions received by [●], 2018. If you do not



 

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send instructions, an independent fiduciary has been selected to determine how to vote all shares for which the trustee does not receive valid and timely instructions from participants. You may revoke previously given voting instructions by [●], 2018, by either revising your instructions online or by submitting to the trustee either a written notice of revocation or a properly completed and signed proxy card bearing a later date. Your voting instructions will be kept confidential by the trustee.

As of the Disney record date, the directors and executive officers of Disney beneficially owned and were entitled to vote, in the aggregate, [●] shares of Disney common stock, representing less than 1% of the outstanding shares of Disney common stock as of the close of business on the Disney record date. The directors and executive officers of Disney have informed Disney that they currently intend to vote all such shares of Disney common stock “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal. As of [●], 2018, the directors and executive officers of 21CF beneficially owned approximately [●] shares of Disney common stock, representing less than 1% of the shares of Disney common stock then outstanding and entitled to vote.

Proxies and Revocations (Page [])

Stockholder of Record. If you are a Disney stockholder of record, you may have your shares of Disney common stock voted on matters presented at the Disney special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by 11:59 p.m. (Eastern Time) on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the Disney special meeting and cast your vote there.

Beneficial Owner. If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Disney common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the Disney special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee.

If you properly sign your proxy card but do not mark the boxes showing how your shares of Disney common stock should be voted on a matter, the shares of Disney common stock represented by your properly signed proxy will be voted “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the Disney special meeting and voting in person or by giving written notice of revocation to Disney prior to the time the Disney special meeting begins. Written notice of revocation should be mailed to: The Walt Disney Company, Attention: Secretary, 500 South Buena Vista Street, Burbank, California 91521. If you have instructed a broker, bank or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, broker or other nominee to change those instructions.



 

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Interests of 21CF’s Directors and Executive Officers in the Transactions (Page [])

The directors and executive officers of 21CF have certain interests in the transactions that may be different from or in addition to those of the 21CF stockholders generally. The 21CF board was aware of these interests and considered them, among other things, in evaluating the combination merger agreement and the transactions and in recommending that the 21CF stockholders approve the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal. See the section entitled “Interests of 21CF’s Directors and Executive Officers in the Transactions” beginning on page [●] of this joint proxy statement/prospectus for a more detailed description of these interests. These interests may include the following, among others:

 

    the accelerated vesting, cancellation and payment of consideration in respect of outstanding equity and equity-based awards;

 

    the grant of certain retention equity awards;

 

    the payment of a prorated cash annual incentive bonus for the year in which the closing occurs;

 

    the entitlement of the executive officers to receive severance benefits under their respective employment agreements;

 

    the establishment of a 21CF severance plan; and

 

    continued indemnification and directors’ and officers’ liability insurance to be provided by the surviving corporation.

Interests of Disney’s Directors and Executive Officers in the Transaction (Page [])

The directors and executive officers of Disney have certain interests in the transactions that may be different from or in addition to those of Disney stockholders generally. In connection with the execution of the combination merger agreement, Disney extended the term of the employment agreement with Disney’s Chairman and Chief Executive Officer and revised certain terms of his employment agreement relating to compensation, including, in connection with such extension, certain increases in compensation and grants of equity awards, the vesting of which is contingent in part on the closing of the transactions. The Disney board was aware of these interests and considered them, among other things, in evaluating the combination merger agreement and the transactions and in recommending that the Disney stockholders approve the share issuance proposal. See the section entitled “Interests of Disney’s Directors and Executive Officers in the Transaction” beginning on page [●] of this joint proxy statement/prospectus for a more detailed description of these interests.

Regulatory Approvals (Page [])

Completion of the transactions is conditioned on (i) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which we refer to as the HSR Act; (ii) receipt of any consents from the Federal Communications Commission, which we refer to as the FCC, if required in connection with the completion of the transactions, which we refer to as the FCC consent, and (iii) receipt of consents from foreign regulators in the European Union, Australia, Brazil, Canada, China, India, Israel, Japan, Mexico, the Russian Federation, South Africa, South Korea, Taiwan, Turkey and the United Kingdom, if required, which we refer to as the foreign regulator consents, and clauses (i) through (iii) collectively as the required governmental consents. It is also a condition to Disney’s obligation to consummate the transactions that no governmental consents required under applicable law in connection with the completion of the transactions will have imposed on Disney or its subsidiaries (including 21CF and the retained subsidiaries after giving effect to the transactions) any restrictions (as defined below), other than permitted restrictions (as defined below).



 

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21CF and Disney have agreed to cooperate with each other and use, and cause their respective subsidiaries to use, their respective reasonable best efforts to obtain all regulatory approvals required to complete the transactions prior to the termination date. In furtherance of the foregoing, Disney and 21CF have agreed to:

 

    prepare and file as promptly as practicable all documentation to effect all necessary notices, reports and other filings; and

 

    obtain prior to the termination date all consents, registrations, approvals, permits, expirations of waiting periods and authorizations necessary or advisable to be obtained from any third party and/or any governmental entity in order to consummate the transactions.

Disney and its subsidiaries (including, for purposes of this sentence, 21CF and the retained subsidiaries, after giving effect to the transactions) are not required to agree to or accept any of the following, which we refer to as the restrictions:

 

    any prohibition of or limitation on its or their ownership of any portion of their respective businesses or assets, including after giving effect to the transactions;

 

    any requirement to divest, hold separate or otherwise dispose of any portion of its or their respective businesses or assets, including after giving effect to the transactions;

 

    any limitation on its or their ability to acquire or hold or exercise full rights of ownership of any capital stock of 21CF or its subsidiaries, including after giving effect to the transactions; or

 

    any other limitation on its or their ability to, or the manner in which they, operate, conduct or exercise decision-making over their respective businesses, assets or operations, including after giving effect to the transactions.

Notwithstanding the foregoing, Disney has committed, if and to the extent necessary to obtain the required governmental consents prior to the termination date, to agree to restrictions of the type contemplated by the first three bullets in the preceding paragraph which solely involve (A) the businesses or assets comprising the retained business other than the specified assets which generated, in the aggregate, no more than $1 billion of 21CF EBITDA and/or (B) 21CF’s regional sports networks, which we refer to as the specified assets. If any such restrictions are agreed to or accepted with respect to the specified assets in obtaining the required governmental consents, clause (A) of the foregoing sentence will be reduced by the lesser of (1) the aggregate amount of 21CF EBITDA attributable to such specified assets and (2) $500 million of 21CF EBITDA. For a more complete description of 21CF EBITDA, see the section entitled “The Transactions—Regulatory Approvals” beginning on page [●] of this joint proxy statement/prospectus.

In addition, notwithstanding the fourth bullet point in the third paragraph of this section, Disney has committed, if and to the extent necessary to obtain the required governmental consents prior to the termination date, to agree to restrictions of the type contemplated by the fourth bullet above which are applied solely against and solely involve and impact the operations, businesses and assets of the retained business and the non-U.S. operations, businesses and assets of Disney and its subsidiaries which restrictions would not, individually or in the aggregate, including when taken together with the net incremental financial impact of restrictions imposed with respect to any proposed or actual acquisition of additional shares in Sky by 21CF, and any agreement or offer related to the foregoing, including the Sky acquisition (other than any such restrictions contemplated and offered by 21CF and Disney pursuant to para. 9 of Schedule 2 of Enterprise Act (Protection of Legitimate Interests) Order 2003, as published on June 19, 2018, together with any impact or consequence of such restrictions), have or reasonably be expected to have an impact, which we refer to as a regulatory adverse impact, on the financial condition, properties, assets, business or results of operations of the retained business and the non-U.S. operations, businesses and assets of Disney and its subsidiaries, taken as a whole, that is both significant and adverse, measured on a scale relative to the size of the retained business. In making this



 

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determination, Disney may, in its sole discretion, take into account any reduction in revenue synergies and/or cost synergies anticipated from the transactions that results from the applicable restrictions. The size of the retained business will be measured (i) if the Sky acquisition is consummated, after giving effect to such completion, (ii) to the extent that any revenue synergies are taken into account by Disney for purposes of determining whether a regulatory adverse impact has occurred, after the inclusion of all revenue synergies anticipated from the mergers and (iii) to the extent that any cost synergies are taken into account by Disney for purposes of determining whether a regulatory adverse impact has occurred, after the inclusion of all cost synergies anticipated from the mergers. For a more complete summary of the factors taken into account by Disney for purposes of determining whether a regulatory adverse impact has occurred, see the section entitled “The Transactions—Regulatory Approvals” beginning on page [●] of this joint proxy statement/prospectus.

We refer to the restrictions described in the foregoing two paragraphs to which Disney has committed to agree as the permitted restrictions.

If the transactions are not consummated under certain circumstances relating to the failure to obtain regulatory approvals, or there is a final, non-appealable order preventing the transactions, in each case relating to antitrust or communications laws, Disney may be required to pay 21CF a termination fee of $2.5 billion. See the section entitled “The Combination Merger Agreement—Termination of the Combination Merger Agreement—Termination Fees” beginning on page [●] of this joint proxy statement/prospectus.

21CF and Disney filed their notification and report forms under the HSR Act on February 1, 2018. A second request was received on March 5, 2018.

Conditions to Completion of the Transactions (Page [])

Each party’s obligation to complete the mergers, and, except with regard to the matters described in the first bullet below, 21CF’s obligation to effect the 21CF charter amendment, the separation and the distribution, is subject to the satisfaction or waiver, to the extent applicable, at or prior to the closing of the transactions of the following conditions:

 

    the 21CF charter amendment must have become effective and the separation and distribution must have been consummated;

 

    the adoption of the combination merger agreement and the distribution merger agreement by the holders of shares of 21CF common stock constituting at least a majority of the outstanding shares of 21CF class A common stock and 21CF class B common stock entitled to vote thereon, voting together as a single class, and the approval of the 21CF charter amendment by the holders of shares of 21CF common stock constituting at least a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon, which we refer to collectively as the 21CF stockholder approval;

 

    the approval of the issuance of New Disney stock by the holders of shares of Disney common stock constituting at least a majority of the outstanding shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote thereon, which we refer to as the Disney stockholder approval;

 

    the shares of New Disney common stock to be issued in the 21CF merger must have been approved for listing on the NYSE upon official notice of issuance and the shares of New Fox common stock to be issued in the distribution must have been approved for listing on Nasdaq upon official notice of issuance;

 

    the expiration or termination of any applicable waiting period under the HSR Act and the receipt of any FCC consents (if required) and the foreign regulator consents;


 

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    no domestic, foreign or transnational governmental entity of a competent jurisdiction has enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits the completion of the transactions;

 

    the registration statement on Form S-4 filed by New Disney in respect of the shares of New Disney common stock to be issued in the 21CF merger, of which this joint proxy statement/prospectus forms a part, and the registration statement filed by 21CF in respect of the shares of New Fox common stock to be issued in the distribution must have become effective under the Securities Act and the Exchange Act, as applicable, and must not be the subject of any stop order or any proceedings initiated or threatened for that purpose by the SEC;

 

    21CF must have obtained an opinion from a nationally recognized valuation or accounting firm or investment bank, as to the adequacy of surplus under Delaware law to effect the dividend, and as to the solvency of New Fox and 21CF after giving effect to the dividend, the stock split and the distribution; and

 

    the separation agreement, the tax matters agreement and the commercial agreements must have been entered into in accordance with the terms of the combination merger agreement.

The obligations of Disney, New Disney and the Merger Subs to effect the transactions also are subject to the satisfaction or waiver by Disney, at or prior to the closing of the transactions, of the following conditions:

 

    the accuracy of the representations and warranties of 21CF in the manner described in the combination merger agreement;

 

    the performance, in all material respects, by 21CF of its obligations under the combination merger agreement at or prior to the closing of the transactions;

 

    no governmental consents will have imposed any restriction other than permitted restrictions; and

 

    receipt by Disney of the hook stock legal comfort, which includes the receipt of (i) a written opinion of Greenwoods & Herbert Smith Freehills Pty Limited, or an Australian senior barrister of Disney’s choice, to the effect that (A) there has been no change in Australian tax law since the execution of the combination merger agreement that would cause any of the conclusions expressed in the signing date tax opinion (as defined in the section entitled “The Combination Merger Agreement—Representations and Warranties”) to change, or (B) if there has been a change in Australian tax law, the 21CF charter amendment, the distribution and the mergers (or any alternative transactions) should not result in any hook stock tax under Australian tax law, and (ii) a written opinion of Cravath to the effect that the distribution and the mergers will result in no recognition of gain or loss in respect of the hook stock shares for U.S. federal income tax purposes (clauses (i) and (ii) together, the “hook stock legal comfort”), with certain situations satisfying the condition (see the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus); and

 

    receipt by Disney of a tax opinion from Cravath that the mergers will qualify for the intended tax treatment (as described in the section entitled “The Combination Merger Agreement—Tax Matters—Intended Tax Treatment”).

21CF’s obligation to effect the transactions is also subject to the satisfaction or waiver by 21CF at or prior to the closing of the transactions of the following additional conditions:

 

    the accuracy of the representations and warranties of Disney, New Disney and the Merger Subs to the extent required under the combination merger agreement;


 

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    the performance, in all material respects, by each of Disney, New Disney and the Merger Subs of its obligations under the combination merger agreement at or prior to the closing of the transactions; and

 

    receipt of a tax opinion from Skadden that the mergers will qualify for the intended tax treatment (as described in the section entitled “The Combination Merger Agreement—Tax Matters—Intended Tax Treatment”).

For a more complete summary of the conditions that must be satisfied or waived prior to the closing of the transactions, see the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

No Solicitation or Negotiation of Acquisition Proposals (Page [])

The combination merger agreement provides that neither 21CF nor Disney, nor any of their respective subsidiaries nor any of their respective officers, directors and employees will, and each of 21CF and Disney will instruct and use its reasonable best efforts to cause its and its subsidiaries’ representatives not to, directly or indirectly:

 

    initiate, solicit, knowingly encourage or otherwise knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any acquisition proposal (as defined below);

 

    engage or otherwise participate in any discussions or negotiations relating to any acquisition proposal or any proposal or offer that would reasonably be expected to lead to an acquisition proposal;

 

    provide any information or data to any person in connection with any acquisition proposal or any proposal, inquiry or offer that would reasonably be expected to lead to an acquisition proposal; or

 

    otherwise knowingly facilitate any effort or attempt to make an acquisition proposal.

The combination merger agreement provides that an acquisition proposal with respect to 21CF means (i) any proposal or offer from any person or group of persons with respect to a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, spin-off, extraordinary dividend, share exchange, business combination or similar transaction involving 21CF or any of its subsidiaries which is structured to result in such person or group of persons (or their stockholders), directly or indirectly, acquiring beneficial ownership of 20% or more of 21CF’s consolidated total assets (including equity securities of its subsidiaries) (using the consolidated total assets of the retained business as the denominator for the purpose of calculating such percentage) or 20% or more of any class of 21CF’s equity interests and (ii) any acquisition by any person or group of persons (or their stockholders) resulting in, or proposal or offer, which if consummated would result in, any person or group of persons (or their stockholders) obtaining control over or becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 20% or more of the total voting power of any class of equity securities of 21CF or 20% or more of 21CF’s consolidated total assets (including equity securities of its subsidiaries) (using the consolidated total assets of the retained business as the denominator for the purpose of calculating such percentage), in each case other than the transactions.

The combination merger agreement also provides that an acquisition proposal with respect to Disney means (i) any proposal or offer from any person or group of persons with respect to a merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, spin-off, extraordinary dividend, share exchange, business combination or similar transaction involving Disney or any of its subsidiaries which is structured to result in such person or group of persons (or their stockholders), directly or indirectly, acquiring beneficial ownership of 20% or more of Disney’s consolidated total assets (including equity securities of its subsidiaries) or any class of Disney’s equity interests and which is expressly conditioned on the



 

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transactions not being consummated, and (ii) any acquisition by any person or group of persons (or their stockholders) resulting in, or proposal or offer, which if consummated would result in, any person or group of persons (or their stockholders) obtaining control over or becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 20% or more of the total voting power of any class of equity securities of Disney or 20% or more of Disney’s consolidated total assets (including equity securities of its subsidiaries), in each case other than the transactions, and which is expressly conditioned on the transactions not being consummated.

Fiduciary Exception (Page [])

Prior to the time, but not after, the 21CF stockholder approval or the Disney stockholder approval, as applicable, is obtained, each of 21CF and Disney may do any of the following in response to an unsolicited, bona fide written acquisition proposal made after the date of the combination merger agreement:

 

    contact the person who made such acquisition proposal and its representatives solely to clarify the terms and conditions thereof;

 

    if the 21CF board or the Disney board, as applicable, has determined in good faith after consultation with outside legal counsel that (A) based on the information available and after consultation with outside legal counsel and a financial advisor of nationally recognized reputation, the unsolicited acquisition proposal either constitutes a superior proposal (as defined below) or could reasonably be expected to result in a superior proposal and (B) the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law:

 

    provide access to information regarding it or any of its subsidiaries in response to a request to the person who made such acquisition proposal and such person’s representatives, provided that such information has previously been, or is substantially concurrently, made available to the other party and that, prior to furnishing any such non-public information, it receives from the person making such acquisition proposal an executed confidentiality agreement with terms at least as restrictive in all material respects on such person as the confidentiality agreement between 21CF and Disney, which we refer to as the 21CF-Disney confidentiality agreement (it being understood that such confidentiality agreement need not contain a standstill or similar obligations to the extent that the party receiving such acquisition proposal releases the other party, concurrently with the entry by the party receiving such acquisition proposal or its subsidiaries into such confidentiality agreement, from any standstill or similar obligations in the 21CF-Disney confidentiality agreement), provided, further, that if the person making such acquisition proposal is a competitor of the party receiving such acquisition proposal and its subsidiaries, such party will not provide information that in the good faith determination of such party constitutes commercially sensitive non-public information to such person in connection with such permitted actions other than in accordance with a clean room or other similar procedures designed to limit any potential adverse effect on the party from sharing such information;

 

    engage or participate in any discussions or negotiations with any such person and its representatives regarding such acquisition proposal; and

 

    refer any inquiring person to this provision.

The combination merger agreement provides that a superior proposal with respect to either 21CF or Disney means an unsolicited, bona fide acquisition proposal with respect to such party made after the date of the combination merger agreement that would result in a person or group (or their stockholders) becoming, directly or indirectly, the beneficial owner of, 60% or more of such party’s consolidated total assets or more than 50% of the total voting power of the equity securities of such party or the successor person of such party, that such



 

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party’s board has determined in its good faith judgment, after consultation with outside counsel and a financial advisor of nationally recognized reputation, would reasonably be expected to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal and the person or group of persons making the proposal, and, if consummated, would result in a transaction more favorable to such party’s stockholders from a financial point of view than the transactions (after taking into account any revisions to the terms of the transactions and the time likely to be required to consummate such acquisition proposal).

No Change in Recommendation or Alternative Acquisition Agreement (Page [])

Subject to certain exceptions described in the section entitled “The Combination Merger Agreement—No Change in Recommendation or Alternative Acquisition Agreement—Fiduciary Exception” beginning on page [●] of this joint proxy statement/prospectus, each of the 21CF board and the Disney board, and each committee of the respective boards, may not:

 

    withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to the other party, its recommendation to its stockholders that they vote in favor of (1) in the case of 21CF, the adoption of the combination merger agreement, the distribution merger agreement and the 21CF charter amendment, which we refer to as the 21CF recommendation, or (2) in the case of Disney, the approval of the stock issuance, which we refer to as the Disney recommendation (in each case, it being understood that if any acquisition proposal structured as a tender or exchange offer is commenced, the applicable party’s board failing to recommend against acceptance of such tender or exchange offer by such party’s stockholders within 10 business days after commencement thereof pursuant to Rule 14d-2 of the Exchange Act will be considered a modification adverse to the other party);

 

    approve or recommend, or publicly declare advisable or publicly propose to enter into, an alternative acquisition agreement relating to any acquisition proposal; or

 

    cause or permit 21CF or Disney or any of their respective subsidiaries, as applicable, to enter into an alternative acquisition agreement.

Fiduciary Exception (Page [])

However, at any time before the 21CF stockholder approval or the Disney stockholder approval, as applicable, is obtained, the 21CF board or the Disney board may:

 

    make a change in recommendation in connection with an acquisition proposal if:

 

    the acquisition proposal did not result from or in connection with a material breach of the combination merger agreement and such acquisition proposal is not withdrawn; and

 

    the applicable party’s board determines in good faith, after consultation with outside counsel and a financial advisor of nationally recognized reputation, that (A) such acquisition proposal constitutes a superior proposal and (B) the failure to take such action would be inconsistent with the respective directors’ fiduciary duties under applicable law;

 

    make a change in recommendation other than in connection with an acquisition proposal if the applicable party’s board determines in good faith, after consultation with outside counsel and a financial advisor of nationally recognized reputation, that the failure to take such action would be inconsistent with the respective directors’ fiduciary duties under applicable law; and/or

 

   

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as a 21CF superior proposal termination event or a Disney superior proposal termination event, as applicable.

The 21CF board and the Disney board may not make a change in recommendation and/or effect a 21CF superior proposal termination event or a Disney superior proposal termination event, as applicable, until after at least five business days following the other party’s receipt of written notice from such party advising that such party’s board intends to take such action and the basis for doing so (which notice will include a copy of any such superior proposal and a copy of any relevant proposed transaction agreements, the identity of the party making such superior proposal and the material terms of the superior proposal or, in the case of notice given other than in connection with a superior proposal, a reasonably detailed description of the development or change in connection with which such party’s board has given such notice). After providing such notice and prior to effecting a change in recommendation and/or 21CF superior proposal termination event or Disney superior proposal termination event:

 

    such party must, during such five business day period, negotiate in good faith with the other party and its representatives, to the extent the other party wishes to negotiate, with respect to any revisions to the terms of the transactions contemplated by the combination merger agreement proposed by the other party; and

 

    in determining whether it may still under the terms of the combination merger agreement make a change in recommendation and/or effect a 21CF superior proposal termination event or a Disney superior proposal termination event, such party’s board must take into account any changes to the terms of the combination merger agreement proposed by the other party and any other information provided by the other party in response to such notice during such five business day period.

Any amendment to the financial terms or conditions or other material terms of any acquisition proposal will be deemed to be a new acquisition proposal except that the five business day notice period for such new acquisition proposal will be three business days. Subject to its right to change its recommendation described above, the 21CF board and the Disney board have agreed to recommend to their respective stockholders that, in the case of 21CF, they adopt the combination merger agreement and the distribution merger agreement and approve the 21CF charter amendment and, in the case of Disney, they approve the stock issuance, and to include such recommendations in this joint proxy statement/prospectus. 21CF and Disney have also each agreed to use its reasonable best efforts to obtain and solicit such adoption or approval.

Termination of the Combination Merger Agreement (Page [])

The combination merger agreement may be terminated and the transactions may be abandoned at any time prior to the 21CF effective time:

 

    by mutual written consent of Disney and 21CF, by action of their respective boards of directors;

 

    by either Disney or 21CF if:

 

   

provided that the party terminating the combination merger agreement has not breached in any material respect its obligations under the combination merger agreement in any manner that has proximately contributed to the failure of the mergers to be consummated, the 21CF merger has not been consummated by 11:59 p.m. (New York City time) on December 13, 2018, which we refer to as the termination date, which termination date may be extended for two six-month periods by either 21CF or Disney, if on such termination date (as it may be extended) any required governmental consents have not been obtained and all other conditions have been satisfied or waived (except for those conditions that by their nature are to be satisfied at the closing of the transactions, provided such conditions were then capable of being satisfied if the closing of the



 

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transactions had taken place). In addition to the two six-month extensions described in the prior sentence, if a governmental entity of a competent jurisdiction (other than the jurisdictions from which the required governmental consents are required) issues an order that is not final and non-appealable and all other conditions have been satisfied or waived (except for those conditions that by their nature are to be satisfied at the closing of the transactions, provided such conditions were then capable of being satisfied if the closing of the transactions had taken place), the termination date (as may have been previously extended) may be further extended until the earliest of (i) six months after the applicable termination date, (ii) two business days following such earlier date on which the mergers are required to occur and (iii) the date such order becomes final and non-appealable;

 

    21CF stockholders do not adopt the combination merger agreement at a meeting duly convened therefor or at any adjournment or postponement thereof at which a stockholder vote is taken on the adoption of the combination merger agreement, which we refer to as a 21CF stockholder approval termination event;

 

    the Disney stockholder approval of the share issuance is not obtained at a meeting duly convened therefor or at any adjournment or postponement thereof at which a stockholder vote is taken on the approval of the issuance of New Disney stock to 21CF stockholders, which we refer to as a Disney stockholder approval termination event; or

 

    provided that the party terminating the combination merger agreement has not breached in any material respect its obligations under the combination merger agreement in any manner that has proximately contributed to the failure of the mergers to be consummated, any law or order permanently restrains, enjoins or otherwise prohibits completion of the mergers, and such law or order has become final and non-appealable, which we refer to as a final law or order termination event;

 

    by 21CF if:

 

    the Disney board effects a change in recommendation, which we refer to as a Disney adverse recommendation change termination event, provided that the Disney stockholder approval of the share issuance has not been obtained;

 

    Disney, New Disney or the Merger Subs breach any of their representations, warranties, covenants or agreements in the combination merger agreement, or any of their representations or warranties shall have become untrue after the date of the combination merger agreement, such that the related conditions to the obligation of 21CF to close the transactions would not be satisfied and such breach is not curable or, if curable, is not cured following written notice to Disney from 21CF of such breach by the earlier of the 30th day following such written notice and the termination date (as it may be extended), provided that 21CF is not then in breach of any of its representations, warranties, covenants or agreements under the combination merger agreement in a manner such that the conditions of Disney regarding the accuracy of 21CF’s representations and warranties and performance of 21CF’s obligations would not be satisfied (unless capable of being cured within 30 days), which we collectively refer to as a Disney breach termination event; or

 

    before the 21CF stockholder approval is obtained, 21CF effects a 21CF superior proposal termination event, after having complied with the procedures described under the section entitled “The Combination Merger Agreement—No Change in Recommendation or Alternative Acquisition Agreement” beginning on page [●] of this joint proxy statement/prospectus, provided that prior to or concurrently with such termination 21CF pays Disney a termination fee equal to $1.525 billion, which we refer to as the termination fee;


 

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    by Disney if:

 

    the 21CF board effects a change in recommendation, which we refer to as a 21CF adverse recommendation change termination event, provided that the 21CF stockholder approval has not been obtained;

 

    21CF breaches any of its representations, warranties, covenants or agreements in the combination merger agreement, or any of its representations or warranties shall have become untrue after the date of the combination merger agreement, such that the related conditions to the obligation of Disney, New Disney and the Merger Subs to close the transactions would not be satisfied and such breach is not curable or, if curable, is not cured following written notice to 21CF from Disney of such breach by the earlier of the 30th day following such written notice and the termination date (as it may be extended), provided that Disney is not then in breach of any of its representations, warranties, covenants or agreements under the combination merger agreement in a manner such that the conditions of 21CF regarding the accuracy of Disney’s representations and warranties and performance of Disney’s obligations would not be satisfied (unless capable of being cured within 30 days), which we collectively refer to as a 21CF breach termination event; or

 

    before the Disney stockholder approval is obtained, Disney effects a Disney superior proposal termination event, after having complied with the procedures described under the section entitled “The Combination Merger Agreement—No Change in Recommendation or Alternative Acquisition Agreement” beginning on page [●] of this joint proxy statement/prospectus, provided that prior to or concurrently with such termination Disney pays 21CF the termination fee.

Termination Fees (Page [])

21CF will pay Disney the termination fee if:

 

    Disney terminates the combination merger agreement pursuant to a 21CF adverse recommendation change termination event;

 

    21CF or Disney terminates the combination merger agreement pursuant to a 21CF stockholder approval termination event at a time when Disney had the right to terminate pursuant to a 21CF adverse recommendation change termination event;

 

    21CF terminates the combination merger agreement pursuant to a 21CF superior proposal termination event; or

 

    a 21CF tail termination fee event occurs.

A 21CF tail termination fee event occurs if:

 

    Disney or 21CF terminates the combination merger agreement pursuant to an outside date termination event at a time when the conditions to closing relating to governmental consents, laws and orders and governmental approval have been satisfied, and between the date of the combination merger agreement and such termination, any person publicly made an acquisition proposal to 21CF or any of its subsidiaries;

 

    Disney or 21CF terminates the combination merger agreement pursuant to a 21CF stockholder approval termination event and between the date of the combination merger agreement and such termination, any person publicly made an acquisition proposal to 21CF or any of its subsidiaries; or

 

    Disney terminates the combination merger agreement pursuant to a 21CF breach termination event in respect of any covenant of 21CF, and between the date of the combination merger agreement and such termination, any person made an acquisition proposal to 21CF or any of its subsidiaries publicly or privately to the 21CF board; and


 

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    in each of the above three circumstances, within 12 months after the date of such termination, 21CF consummates or enters into an agreement contemplating an acquisition proposal.

In defining “acquisition proposal” for purposes of the 21CF tail termination fee event, all references to “20% or more” in the definition of acquisition proposal with respect to 21CF (found on page [●] of this joint proxy statement/prospectus) are replaced with references to “more than 50%” and references to “(using the consolidated total assets of the retained business as the denominator for purposes of calculating such percentage)” are deleted.

Disney will pay 21CF the termination fee if:

 

    21CF terminates the combination merger agreement pursuant to a Disney adverse recommendation change termination event;

 

    21CF or Disney terminates the combination merger agreement pursuant to a Disney stockholder approval termination event at a time when 21CF had the right to terminate pursuant to a Disney adverse recommendation change termination event;

 

    Disney terminates the combination merger agreement pursuant to a Disney superior proposal termination event; or

 

    a Disney tail termination fee event occurs.

A Disney tail termination fee event occurs if:

 

    Disney or 21CF terminates the combination merger agreement pursuant to an outside date termination event at a time when the conditions to closing relating to governmental consents, laws and orders and governmental approval have been satisfied, and between the date of the combination merger agreement and such termination, any person publicly made an acquisition proposal to Disney or any of its subsidiaries;

 

    Disney or 21CF terminates the combination merger agreement pursuant to a Disney stockholder approval termination event, and between the date of the combination merger agreement and such termination, any person publicly made an acquisition proposal to Disney or any of its subsidiaries; or

 

    21CF terminates the combination merger agreement pursuant to a Disney breach termination event in respect of any covenant of Disney or a Merger Sub, and between the date of the combination merger agreement and such termination, any person made an acquisition proposal to Disney or any of its subsidiaries publicly or privately to the Disney board; and

 

    in each of the above three circumstances, within 12 months after the date of such termination, Disney consummates or enters into an agreement contemplating an acquisition proposal.

In defining “acquisition proposal” for purposes of the Disney tail termination fee event, all references to “20% or more” in the definition of acquisition proposal with respect to Disney (found on page [●] of this joint proxy statement/prospectus) are replaced with references to “more than 50%” and the requirement that a proposal be expressly conditioned on the transactions not being consummated in order to constitute an acquisition proposal is deleted.

Disney will pay 21CF an amount equal to $2.5 billion, which we refer to as the regulatory termination fee, if:

 

    Disney or 21CF terminates the combination merger agreement pursuant to a final law or order termination event as a result of any applicable antitrust law, communications law or foreign regulatory law or an order imposed by a governmental entity with jurisdiction over enforcement of any applicable antitrust law, communications law or foreign regulatory law with respect to such laws; or


 

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    Disney or 21CF terminates the combination merger agreement pursuant to an outside date termination event at a time when one or more of the conditions to closing relating to governmental consents or governmental approvals or laws and orders (to the extent such failure of conditions relating to laws and orders relates to certain applicable antitrust laws, communications laws or foreign regulatory laws) have not been satisfied; and

 

    in each of the above two circumstances, both of the following requirements are satisfied:

 

    all other conditions to the obligation of Disney to effect the transactions have been satisfied or waived (except for those conditions that by their nature are to be satisfied at the closing of the transactions, provided such conditions were then capable of being satisfied if the closing of the transactions had taken place); and

 

    21CF is not in breach in any material respect of its obligations under the combination merger agreement in any manner that would have proximately contributed to the events giving rise to the right of Disney or 21CF to terminate the combination merger agreement.

Under no circumstances will 21CF or Disney be required to pay a termination fee more than once. In addition, under no circumstances will Disney be required to pay both the termination fee and the regulatory termination fee. If Disney is required to pay the termination fee to 21CF at a time when Disney is in breach of its obligation to use reasonable best efforts to obtain all regulatory approvals required to complete the transactions such that 21CF would have the right to terminate the combination merger agreement pursuant to a Disney breach termination event, Disney must pay 21CF the regulatory termination fee instead of the termination fee (or, if Disney has already paid the termination fee, an amount equal to the regulatory termination fee minus the termination fee).

The Voting Agreements (Page [])

The Pre-Closing Voting Agreement

Concurrently with the execution and delivery of the combination merger agreement, on June 20, 2018, the Murdoch Family Trust and Cruden Financial Services LLC, the corporate trustee of the Murdoch Family Trust, which collectively we refer to as the covered stockholders, entered into an Amended and Restated Voting Agreement, dated as of June 20, 2018, by and among Disney and the covered stockholders, which we refer to as the pre-closing voting agreement, with Disney. Shares of 21CF common stock beneficially owned by the covered stockholders subject to the pre-closing voting agreement, which we refer to as the pre-closing voting agreement shares, comprised 57,000 shares of 21CF class A common stock, constituting less than 1% of the total issued and outstanding shares of 21CF class A common stock as of June 20, 2018, and 306,623,480 shares of 21CF class B common stock, constituting approximately 38.40% of the total issued and outstanding shares of 21CF class B common stock as of June 20, 2018.

Pursuant to the terms of the pre-closing voting agreement, the covered stockholders agreed, among other things, to vote the pre-closing voting agreement shares in favor of adoption of the combination merger agreement and the distribution merger agreement and approval of the 21CF charter amendment. Additionally, the covered stockholders have agreed, among other things, to not sell or transfer the pre-closing voting agreement shares, subject to certain exceptions, and to not solicit any acquisition proposal with respect to 21CF. The pre-closing voting agreement will terminate upon the earliest of (i) the termination of the combination merger agreement, (ii) the 21CF effective time and (iii) such date and time as the combination merger agreement shall have been amended in a manner that reduces the amount of 21CF merger consideration or is material and adverse to any of the covered stockholders without the covered stockholder’s prior written consent. For more information regarding the pre-closing voting agreement, see “The Voting Agreements” beginning on page [●] of this joint proxy statement/prospectus. The pre-closing voting agreement is also attached to this joint proxy statement/prospectus as Annex C.



 

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The Post-Closing Voting Agreement

The covered stockholders and New Disney have also entered into a voting and proxy agreement, dated as of June 20, 2018, which we refer to as the post-closing voting agreement. Pursuant to the post-closing voting agreement, the covered stockholders have irrevocably and unconditionally granted to, and appointed, New Disney as proxy and attorney-in-fact, for and in the name, place and stead of the covered stockholders, to vote or cause to be voted (including by proxy or written consent, if applicable) all excess shares in accordance with the voting obligation, subject to certain termination provisions described below. The covered stockholders have also agreed to not be bound by any agreement that would interfere with the voting obligation.

The voting obligation means the obligation to vote (or exercise rights of consent in respect to) all excess shares in the same proportion as all other votes cast (or consents exercised) with respect to the applicable matter, with such proportion determined without inclusion of the votes to be cast (or consents to be exercised) by the covered stockholders. The voting obligation becomes effective upon the closing under the combination merger agreement, and is not effective prior to such time. Excess shares means the number of shares of voting securities of New Disney as is necessary to ensure that, in accordance with the Multiple Ownership Rules of the Federal Communications Commission, the covered stockholders and, to the extent applicable under the Multiple Ownership Rules, their related persons do not violate the limitations under the Multiple Ownership Rules. However, if the voting of such shares on a particular matter would not violate the limitations under the Multiple Ownership Rules, such shares will not constitute excess shares for the limited purpose of voting on such matter. The covered stockholders have also agreed not to be bound by any agreement that would interfere with the voting obligation. For more information regarding the post-closing voting agreement, including the circumstances in which it terminates, see “The Voting Agreements” beginning on page [●] of this joint proxy statement/prospectus. The post-closing voting agreement is also attached to this joint proxy statement/prospectus as Annex D.

Description of Financing (Page [])

Disney and New Disney expect to fund the 21CF cash consideration (approximately $35.7 billion) upon completion of the mergers through the issuance of senior unsecured notes and/or commercial paper. Such contemplated financing is backstopped by a 364-day unsecured bridge term loan facility to be provided by a five bank syndicate totaling $35.7 billion. The receipt of financing by Disney and New Disney is not a condition to completion of the mergers and, accordingly, Disney and New Disney will be required to complete the mergers (assuming that all of the conditions to its obligations under the combination merger agreement are satisfied) whether or not debt financing is available at all or on acceptable terms. See the section entitled “Description of Financing” beginning on page [●] of this joint proxy statement/prospectus.

Accounting Treatment (Page [])

Disney prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. At the time of the transactions, New Disney will become the successor to Disney with no change in accounting basis. The 21CF merger will be accounted for by New Disney using the acquisition method of accounting. New Disney will be treated as the acquiror for accounting purposes.

Material United States Federal Income Tax Consequences (Page [])

Consequences of the Distribution and the 21CF Merger to 21CF Stockholders

Consequences of the Distribution. The U.S. federal income tax consequences of the receipt by 21CF stockholders of New Fox common stock in the distribution are uncertain. A distribution undertaken in connection with an acquisition where cash comprises a substantial portion of the aggregate consideration can prevent the



 

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distribution from qualifying as tax-free as a result of the “anti-device” requirement under Section 355 of the Code. The determination of whether the distribution can satisfy such requirement is complex, inherently factual in nature, and subject to significant uncertainty because the law is unclear. As a result, counsel cannot opine that the distribution will be tax-free to 21CF stockholders under Section 355 of the Code. Although New Disney intends to report the distribution as taxable to 21CF stockholders, 21CF stockholders will not be prohibited from taking a contrary position. 21CF stockholders are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the distribution to them. For purposes of deciding how to vote, 21CF stockholders should assume that the distribution does not qualify as a distribution described in Section 355 of the Code and will therefore be a fully taxable transaction, with the consequences that each U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus) who receives New Fox common stock in the distribution will generally recognize taxable gain or loss equal to the difference between the fair market value of the New Fox common stock received by the stockholder in the distribution and its tax basis in the portion of its shares of 21CF common stock exchanged therefor.

Consequences of the 21CF Merger. For U.S. federal income tax purposes, the mergers, taken together, are intended to qualify as a transaction described in Section 351 of the Code. It is a condition to 21CF’s obligation to complete the transactions that 21CF receive an opinion of its counsel, Skadden, to the effect that the mergers, taken together, will be treated as a transaction described in Section 351 of the Code. Accordingly, on the basis of such opinion:

 

    If a U.S. holder receives solely shares of New Disney common stock in exchange for shares of 21CF common stock in the 21CF merger, such holder will generally not recognize any gain or loss on such exchange.

 

    If a U.S. holder receives solely cash in exchange for its shares of 21CF common stock in the 21CF merger, such holder will generally recognize gain or loss on such exchange equal to the difference between the amount of cash received and such holder’s adjusted tax basis in such shares of 21CF common stock exchanged therefor.

 

    If a U.S. holder receives a combination of New Disney common stock and cash in exchange for its shares of 21CF common stock in the 21CF merger, such holder will generally recognize gain, but not loss, on such exchange equal to the lesser of: (1) the excess of (a) the sum of the fair market value of the New Disney common stock and the amount of cash received over (b) such U.S. holder’s tax basis in the 21CF common stock surrendered in exchange therefor, and (2) the amount of cash received by such stockholder in the 21CF merger.

A more detailed discussion of the material United States federal income tax consequences of the distribution and the 21CF merger can be found in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

Consequences of the Disney Merger to Disney Stockholders

For U.S. federal income tax purposes, the mergers, taken together, are intended to qualify as a transaction described in Section 351 of the Code. It is a condition to Disney’s obligation to complete the transactions that Disney receive an opinion of its counsel, Cravath, to the effect that the mergers, taken together, will be treated as a transaction described in Section 351 of the Code. Accordingly, on the basis of such opinion, a U.S. holder of Disney common stock who exchanges such common stock for New Disney common stock in the Disney merger will not recognize any gain or loss on such exchange. A more detailed discussion of the material United States federal income tax consequences of the Disney merger can be found in the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.



 

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Comparison of Stockholders’ Rights (Page [])

The rights of 21CF stockholders are governed by the 21CF charter, and bylaws as amended through December 13, 2017, which we refer to as the 21CF bylaws, and by the DGCL. The rights of Disney stockholders are governed by the Disney charter and the Disney bylaws and by the DGCL.

Immediately prior to the Disney effective time, New Disney shall cause its certificate of incorporation and bylaws to be amended to contain provisions identical to the Disney charter and the Disney bylaws, respectively, in effect immediately prior to the Disney merger. The rights of 21CF stockholders under the New Disney charter and the New Disney bylaws will differ in some respects from their rights under the 21CF charter and the 21CF bylaws. The rights of Disney stockholders under the New Disney charter and the New Disney bylaws will be substantially the same as their rights under the Disney charter and the Disney bylaws. For more detailed information regarding a comparison of your rights as a stockholder of 21CF and New Disney, see the section entitled “Comparison of Stockholders’ Rights” beginning on page [●] of this joint proxy statement/prospectus.

Appraisal Rights of 21CF Stockholders (Page [])

Pursuant to Section 262 of the DGCL, 21CF stockholders who do not vote in favor of the adoption of the combination merger agreement and who comply with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of such shares by the Delaware Court of Chancery and to receive payment in cash of the fair value of those shares. It is possible that the fair value as determined by the Delaware Court of Chancery may be more or less than, or the same as, the per share value of the 21CF merger consideration.

21CF stockholders who wish to preserve their appraisal rights must make a demand for appraisal prior to the time the 21CF stockholder vote is taken on the adoption of the combination merger agreement. In addition to submitting a demand for appraisal, such 21CF stockholders must continuously hold such shares through the 21CF effective time, must not vote in favor of the adoption of the combination merger agreement, must not surrender their shares in exchange for the 21CF merger consideration, and must otherwise follow the procedures prescribed by Section 262 of the DGCL.

You are encouraged to read Section 262 of the DGCL carefully and in their entirety. Due to the complexity of the procedures for exercising your appraisal rights, 21CF stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of appraisal rights. See the section entitled “Appraisal Rights of 21CF Stockholders” beginning on page [●] of this joint proxy statement/prospectus for additional information and the text of Section 262 of the DGCL reproduced in its entirety as Annex J to this proxy statement/prospectus.

Disney stockholders are not entitled to appraisal rights under the DGCL in connection with the transactions.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF 21CF

The following table presents selected historical consolidated financial data for 21CF, as of and for the fiscal years ended June 30, 2017, 2016, 2015, 2014 and 2013, as of March 31, 2018 and for the nine months ended March 31, 2018 and March 31, 2017. The statement of operations data for each of the three years in the period ended June 30, 2017 and the balance sheet data as of June 30, 2017 and 2016 have been obtained from 21CF’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017, which is incorporated by reference into this joint proxy statement/prospectus. The statements of operations data for the years ended June 30, 2014 and 2013 and the balance sheet data as of June 30, 2015, 2014 and 2013 have been derived from 21CF’s audited consolidated financial statements for such years, which have not been incorporated into this document by reference. The financial data as of March 31, 2018 and for the nine months ended March 31, 2018 and March 31, 2017 have been obtained from 21CF’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in 21CF’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and 21CF’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

 

    For the nine months
ended

March 31,(1)
(unaudited)
    For the fiscal years ended June 30,  
    2018     2017     2017(2)     2016(2)     2015(2)     2014(3)     2013(4)  
    (in millions, except per share data)  

STATEMENT OF OPERATIONS DATA

             

Revenues

  $ 22,459     $ 21,752     $ 28,500     $ 27,326     $ 28,987     $ 31,867     $ 27,675  

Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders

    3,551       2,495       2,996       2,763       8,373       3,785       6,820  

Net income attributable to Twenty-First Century Fox, Inc. stockholders

    3,544       2,476       2,952       2,755       8,306       4,514       7,097  

Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders per share—basic

    1.92       1.35       1.62       1.42       3.94       1.67       2.91  

Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders per share—diluted

    1.91       1.34       1.61       1.42       3.93       1.67       2.91  

Net income attributable to Twenty-First Century Fox, Inc. stockholders per share—basic

    1.91       1.33       1.59       1.42       3.91       1.99       3.03  

Net income attributable to Twenty-First Century Fox, Inc. stockholders per share—diluted

    1.91       1.33       1.59       1.42       3.90       1.99       3.03  

Cash dividend per share

    0.360       0.360       0.360       0.300       0.275       0.250       0.170  


 

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     As of
March 31,
(unaudited)
     As of June 30,  
     2018      2017      2016      2015      2014      2013  
     (in millions, except per share data)  

BALANCE SHEET DATA

                 

Cash and cash equivalents

   $ 7,372      $ 6,163      $ 4,424      $ 8,428      $ 5,415      $ 6,659  

Total assets(5)

     53,978        50,724        48,193        49,868        54,628        50,785  

Borrowings(5)

     19,997        19,913        19,553        18,868        18,893        16,299  

Twenty-First Century Fox, Inc. stockholders’ equity

     18,971        15,722        13,661        17,220        17,418        16,998  

Book value per share

   $ 10.24      $ 8.49      $ 7.31      $ 8.45      $ 7.89      $ 7.34  

 

(1) See Notes 1, 2 and 11 to the unaudited consolidated financial statements of 21CF contained in its Quarterly Report on Form 10-Q, for the quarterly period ended March 31, 2018, filed May 10, 2018 for information with respect to U.S. tax reform, accounting changes, significant acquisitions, disposals, restructuring charges and other transactions during the nine months ended March 31, 2018 and 2017.
(2) See Notes 2, 3, 4, 5, 6, 7 and 22 to the audited consolidated financial statements of 21CF contained in its Annual Report on Form 10-K, for the fiscal year ended June 30, 2017, filed August 14, 2017, for information with respect to significant acquisitions, disposals, discontinued operations, accounting changes, impairment charges, restructuring charges and other transactions during fiscal 2017, 2016 and 2015.
(3) In fiscal 2014, 21CF acquired an additional 31% interest in the Yankees Entertainment and Sports Network, which we refer to as the YES Network, increasing 21CF’s ownership interest to an 80% controlling interest, for approximately $680 million, net of cash acquired. As a result of this transaction, 21CF consolidated the balance sheet and operating results of the YES Network, including $1.7 billion in debt. Also in fiscal 2014, a subsidiary of News Corp (as defined below), prior to the News Corp. separation (as defined below), had filed for tax reimbursement in a foreign jurisdiction. During fiscal 2014, the foreign jurisdiction notified News Corp that it had accepted its claims and would reimburse the taxes plus interest to News Corp. As of June 30, 2014, the net amount that 21CF received, pursuant to the tax sharing and indemnification agreement with News Corp, was approximately $720 million, which was included in income from discontinued operations, net of tax. Also during fiscal 2014, through separate transactions, 21CF sold its 47% interest in CMC-News Asia Holdings Limited, its 50% interest in STATS LLC, its 50% interest in STAR CJ Network India Pvt. Ltd. and its 12% interest in Phoenix Satellite Television Holdings Ltd. for approximately $465 million. 21CF recorded a gain on these transactions.
(4) In fiscal 2013, 21CF acquired additional shares of Sky Deutschland AG, which we refer to as Sky Deutschland, increasing 21CF’s ownership interest to approximately 55%. As a result of this transaction, the carrying amount of 21CF’s previously held equity interest in Sky Deutschland was revalued to fair value as of the acquisition date, resulting in a gain of approximately $2.1 billion. Also during fiscal 2013, 21CF sold its 49% investment in NDS Group Limited to Cisco Systems Inc. for approximately $1.9 billion. 21CF recorded a gain of approximately $1.4 billion on this transaction. Additionally, 21CF completed the separation of its business into two independent publicly traded companies, which we refer to as the News Corp. separation, by distributing to its stockholders all of the outstanding shares of the new News Corporation, which we refer to as News Corp. Effective June 28, 2013, the News Corp. separation qualified for discontinued operations treatment in accordance with ASC 205-20, “Discontinued Operations.” 21CF distributed approximately $2.4 billion to News Corp.
(5) On July 1, 2016, 21CF adopted Accounting Standards Update (“ASU”) 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”) on a retrospective basis. The adoption of ASU 2015-03 resulted in a $172 million, $171 million, $165 million and $159 million decrease in Other non-current assets and Non-current Borrowings in the Consolidated Balance Sheets as of June 30, 2016, 2015, 2014 and 2013, respectively.


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF DISNEY

The following table presents selected historical consolidated financial data for Disney as of and for the fiscal years ended September 30, 2017, October 1, 2016, October 3, 2015, September 27, 2014 and September 28, 2013, as of March 31, 2018 and April 1, 2017 and for the six months ended March 31, 2018 and April 1, 2017, respectively. The statements of income and cash flows data for each of the three fiscal years in the period ended September 30, 2017 and the balance sheet data as of September 30, 2017 and October 1, 2016 have been obtained from Disney’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the fiscal year ended September 30, 2017, which are incorporated by reference into this joint proxy statement/prospectus. The statements of income and cash flows data for the years ended September 27, 2014 and September 28, 2013 and the balance sheet data as of October 3, 2015, September 27, 2014 and September 28, 2013 have been derived from Disney’s audited consolidated financial statements for such years, which have not been incorporated into this document by reference. The statement of income and cash flows data for the six months ended March 31, 2018 and April 1, 2017 and the balance sheet data as of March 31, 2018, have been derived from Disney’s unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which is incorporated by reference into this joint proxy statement/prospectus. The balance sheet data as of April 1, 2017 has been derived from Disney’s unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended April 1, 2017, which has not been incorporated into this document by reference.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Disney’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and Disney’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

 

    Six Months Ended     Years Ended  
    March 31,
2018
    April 1,
2017
    September 30,
2017(1)
    October 1,
2016(2)
    October 3,
2015(3)
    September 27,
2014(4)
    September 28,
2013(5)
 
    (Dollar amounts in millions, except per share data)  

Statements of Income

             

Revenues

  $ 29,899     $ 28,120     $ 55,137     $ 55,632     $ 52,465     $ 48,813     $ 45,041  

Net income

    7,588       5,027       9,366       9,790       8,852       8,004       6,636  

Net income attributable to Disney

    7,360       4,867       8,980       9,391       8,382       7,501       6,136  

Per common share

             

Basic earnings per share attributable to Disney

    4.88       3.07       5.73       5.76       4.95       4.31       3.42  

Diluted earnings per share attributable to Disney

    4.86       3.05       5.69       5.73       4.90       4.26       3.38  

Dividends declared per common share(6)

    0.84       0.78       1.56       1.42       1.81       0.86       0.75  

Balance Sheets

             

Total assets

    97,943       91,807       95,789       92,033       88,182       84,141       81,197  

Long-term obligations

    26,615       23,169       26,710       24,189       19,142       18,573       17,293  

Disney shareholders’ equity

    45,151       43,784       41,315       43,265       44,525       44,958       45,429  

Statements of Cash Flows(7)

             

Cash provided (used) by:

             

Operating activities

    6,763       4,673       12,343       13,136       11,385       10,148       9,495  

Investing activities

    (3,805     (2,390     (4,111     (5,758     (4,245     (3,345     (4,676

Financing activities

    (2,882     (3,049     (8,959     (7,220     (5,801     (6,981     (4,458


 

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(1) The fiscal 2017 results include a benefit from the adoption of a new accounting pronouncement related to the tax impact of employee share-based awards ($0.08 per diluted share). In addition, results include a non-cash net gain in connection with the acquisition of a controlling interest in BAMTech LLC ($0.10 per diluted share), an adverse impact due to a charge, net of committed insurance recoveries, incurred in connection with the settlement of litigation ($0.07 per dilutive share) and restructuring and impairment charges ($0.04 per diluted share), which collectively resulted in a net adverse impact of $0.01 per diluted share.
(2) The fiscal 2016 results include Disney’s share of a net gain recognized by A+E Television Networks LLC in connection with an acquisition of an interest in Vice Group Holding, Inc. ($0.13 per diluted share), restructuring and impairment charges ($0.07 per diluted share) and a charge in connection with the discontinuation of our Infinity console game business ($0.05 per diluted share). These items collectively resulted in a net benefit of $0.01 per diluted share.
(3) The fiscal 2015 results include the write-off of a deferred tax asset as a result of a Disneyland Paris recapitalization completed during calendar 2015, which included an equity rights offering and a conversion of Disney loans to Disneyland Paris into equity ($0.23 per diluted share) and restructuring and impairment charges ($0.02 per diluted share), which collectively resulted in a net adverse impact of $0.25 per diluted share.
(4) The fiscal 2014 results include a loss resulting from the foreign currency translation of net monetary assets denominated in Venezuelan currency ($0.05 per diluted share), restructuring and impairment charges ($0.05 per diluted share), a gain on the sale of property ($0.03 per diluted share) and a portion of a settlement of an affiliate contract dispute ($0.01 per diluted share). These items collectively resulted in a net adverse impact of $0.06 per diluted share.
(5) During fiscal 2013, Disney completed a $4.1 billion cash and stock acquisition of Lucasfilm Ltd. LLC. In addition, results for the year include a charge related to the Celador litigation ($0.11 per diluted share), restructuring and impairment charges ($0.07 per diluted share), a charge related to an equity redemption by Hulu LLC ($0.02 per diluted share), favorable tax adjustments related to an increase in the amount of prior-year foreign earnings considered to be indefinitely reinvested outside of the United States and favorable tax adjustments related to pre-tax earnings of prior years ($0.12 per diluted share) and gains in connection with the sale of our equity interest in ESPN STAR Sports and certain businesses ($0.08 per diluted share). These items collectively resulted in a net adverse impact of $0.01 per diluted share.
(6) In fiscal 2015, Disney began paying dividends on a semiannual basis. Accordingly, fiscal 2015 includes dividend payments related to fiscal 2014 and the first half of fiscal 2015.
(7) Cash flow information for prior years has been restated to reflect the adoption of new accounting standards during fiscal 2017. Operating activities reflected a $77 million decrease, a $476 million increase, a $368 million increase and a $43 million increase, and financing activities reflected decreases of $229 million, $287 million, $271 million and $244 million in fiscal 2016, 2015, 2014 and 2013, respectively. Operating activities reflected a $185 million increase for the three months ended December 31, 2016.


 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW DISNEY

The selected unaudited pro forma condensed combined financial data presented below are based on the historical consolidated financial statements of Disney and the unaudited pro forma condensed combined financial statements of RemainCo. The selected unaudited pro forma condensed combined financial data present (1) the combination of the historical financial statements of Disney and the pro forma financial statements of RemainCo (including its existing 39% interest in Sky) and (2) the combination of the historical financial statements of Disney and the pro forma financial statements of RemainCo giving effect to the completion of the Sky acquisition at 21CF’s offer price of £10.75 per share. These selected unaudited pro forma condensed combined financial statements give effect to (1) the completion of the transactions, (2) the issuance by New Disney of approximately $35.7 billion in new indebtedness to fund the 21CF cash consideration and (3) the completion of the transactions and the Sky acquisition at the current offer price of £10.75 per share, as if they had been completed on October 2, 2016, for statement of income purposes, and on March 31, 2018 for balance sheet purposes.

The selected unaudited pro forma condensed combined financial data, which are preliminary in nature, have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma combined financial information and the accompanying notes appearing in the section entitled “Unaudited Pro Forma Condensed Combined Financial Data of New Disney” beginning on page [●] of this joint proxy statement/prospectus. The selected unaudited pro forma condensed combined financial data are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations of New Disney would have been had the transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2018

(in millions)

 

    Disney     RemainCo     Pro Forma
Adjustments
(Sky at 39%)
    Combined
(Sky at 39%)
    RemainCo
Consolidation
of Sky
    Pro Forma
Adjustments
(Sky at 100%)
    Combined
(Sky at 100%)
 

Total assets

  $ 97,943     $ 47,340     $ 82,388     $ 227,671     $ 37,369     $ (1,596   $ 263,444  

Long-term obligations

    26,615       22,151       38,610       87,376       24,096       (10     111,462  

Unaudited Pro Forma Condensed Combined Statement of Income for the Year Ended September 30, 2017

(in millions, except per share data)

 

    Disney     RemainCo     Pro Forma
Adjustments
(Sky at 39%)
    Combined
(Sky at 39%)
    RemainCo
Consolidation
of Sky
    Pro Forma
Adjustments
(Sky at 100%)
    Combined
(Sky at 100%)
 

Revenues

  $ 55,137     $ 19,307     $ 945     $ 75,389     $ 15,907     $ (379   $ 90,917  

Net income

    9,366       1,600       (3,465     7,501       18       100       7,619  

Net income attributable to registrant

    8,980       1,363       (2,904     7,439       23       100       7,562  

Basic earnings per share

    5.73       0.74       —         3.89       —         —         3.96  

Diluted earnings per share

    5.69       0.73       —         3.87       —         —         3.94  

Weighted average number of common and common equivalent shares outstanding:

             

Basic

    1,568       1,854       343       1,911           1,911  

Diluted

    1,578       1,856       343       1,921           1,921  


 

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Unaudited Pro Forma Condensed Combined Statement of Income for the Six-Month Period Ended

March 31, 2018

(in millions, except per share data)

 

    Disney     RemainCo     Pro Forma
Adjustments
(Sky at 39%)
    Combined
(Sky at 39%)
    RemainCo
Consolidation
of Sky
    Pro Forma
Adjustments
(Sky at 100%)
    Combined
(Sky at 100%)
 

Revenues

  $ 29,899     $ 10,017     $ 471     $ 40,387     $ 8,576     $ (191   $ 48,772  

Net income

    7,588       1,486       (2,170     6,904       18       49       6,971  

Net income attributable to registrant

    7,360       1,359       (1,714     7,005       19       49       7,073  

Basic earnings per share

    4.88       0.73       —         3.79       —         —         3.82  

Diluted earnings per share

    4.86       0.73       —         3.77       —         —         3.81  

Weighted average number of common and common equivalent shares outstanding:

             

Basic

    1,507       1,852       343       1,850           1,850  

Diluted

    1,515       1,854       343       1,858           1,858  


 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF REMAINCO

The selected unaudited pro forma condensed combined financial data presented below are based on the historical consolidated financial statements of 21CF and unaudited pro forma condensed combined financial statements of RemainCo. The selected unaudited pro forma condensed combined financial statements present the estimated effects of (i) the separation and distribution of New Fox and the related net cash dividend from New Fox to 21CF, as if they had been completed on July 1, 2014, for statement of operations purposes, and on March 31, 2018 for balance sheet purposes, and (ii) the Sky acquisition, as if it had been completed on July 1, 2016, for statement of operations purposes, and on March 31, 2018 for balance sheet purposes.

The selected unaudited pro forma condensed combined financial data, which are preliminary in nature, have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information and the accompanying notes appearing in the section entitled “Unaudited Pro Forma Condensed Combined Financial Data of RemainCo” beginning on page [●] of this joint proxy statement/prospectus. The selected unaudited pro forma condensed combined financial data are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations of RemainCo would have been had the transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended December 31, 2017

(in millions, except per share data)

 

     21CF
Historical
     New Fox     Pro Forma
Adjustments
     RemainCo
without
Sky
(Subtotal)
     Consolidation
of Sky
     RemainCo
with Sky
 

Revenues

   $ 15,039      $ (5,326   $ 304      $ 10,017      $ 8,576      $ 18,593  

Income (loss) from continuing operations attributable to 21CF stockholders

     2,675        (1,325     9        1,359        19        1,378  

Income from continuing operations attributable to 21CF stockholders per share—Basic and Diluted

   $ 1.44           $ 0.73         $ 0.74  

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended June 30, 2017

(in millions, except per share data)

 

     21CF
Historical
     New Fox     Pro Forma
Adjustments
    RemainCo
without
Sky
(Subtotal)
     Consolidation
of Sky
     RemainCo
with Sky
 

Revenues

   $ 28,500      $ (9,977   $ 784     $ 19,307      $ 15,907      $ 35,214  

Income (loss) from continuing operations attributable to 21CF stockholders

     2,996        (1,595     (38     1,363        23        1,386  

Income from continuing operations attributable to 21CF stockholders per share—Basic

   $ 1.62          $ 0.74         $ 0.75  

Income from continuing operations attributable to 21CF stockholders per share—Diluted

   $ 1.61          $ 0.73         $ 0.75  


 

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended June 30, 2016

(in millions, except per share data)

 

     21CF
Historical
     New Fox     Pro Forma
Adjustments
    RemainCo  

Revenues

   $ 27,326      $ (8,948   $ 733     $ 19,111  

Income (loss) from continuing operations attributable to 21CF stockholders

     2,763        (1,284     (8     1,471  

Income from continuing operations attributable to 21CF stockholders per share—Basic and Diluted

   $ 1.42          $ 0.76  

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended June 30, 2015

(in millions, except per share data)

 

     21CF
Historical
     New Fox     Pro Forma
Adjustments
    RemainCo  

Revenues

   $ 28,987      $ (8,227   $ 696     $ 21,456  

Income (loss) from continuing operations attributable to 21CF stockholders

     8,373        (1,046     (27     7,300  

Income from continuing operations attributable to 21CF stockholders per share-Basic

   $ 3.94          $ 3.43  

Income from continuing operations attributable to 21CF stockholders per share-Diluted

   $ 3.93          $ 3.43  

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2018

(in millions)

 

     21CF
Historical
     New Fox     Pro Forma
Adjustments
     RemainCo
without
Sky
(Subtotal)
     Consolidation
of Sky
     RemainCo
with Sky
 

Total assets

   $ 53,978      $ (13,484   $ 6,846      $ 47,340      $ 37,369      $ 84,709  

Borrowings

     19,997        —         —          19,997        23,745        43,742  


 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF NEW FOX

The selected unaudited pro forma condensed combined financial data presented below are based on the unaudited pro forma condensed combined financial statements of New Fox. The selected unaudited pro forma condensed combined financial statements present the estimated effects of (i) New Fox on an unaudited historical carve-out basis following the separation and distribution and (ii) the New Fox financing and the net cash dividend from New Fox to 21CF, as if it had been completed on July 1, 2016, for statement of operations purposes, and on March 31, 2018 for balance sheet purposes.

The selected unaudited pro forma condensed combined financial data, which are preliminary in nature, have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information and the accompanying notes appearing in the section entitled “Unaudited Pro Forma Condensed Combined Financial Data of New Fox” beginning on page [●] of this joint proxy statement/prospectus. The selected unaudited pro forma condensed combined financial data are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations of New Fox would have been had the transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended March 31, 2018

(in millions)

 

     New Fox      Carve-out
Adjustments
    New Fox Carve-
out (Subtotal)
     New Fox
Financing and
Pro Forma
Adjustments
    New Fox
Pro Forma
 

Revenues

   $ 7,801      $ —       $ 7,801      $ —       $ 7,801  

Net income (loss) attributable to New Fox stockholders

     1,837        (156     1,681        (139     1,542  

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended June 30, 2017

(in millions)

 

     New Fox      Carve-out
Adjustments
    New Fox Carve-
out (Subtotal)
     New Fox
Financing and
Pro Forma
Adjustments
    New Fox
Pro Forma
 

Revenues

   $ 9,977      $ —       $ 9,977      $ —       $ 9,977  

Net income (loss) attributable to New Fox stockholders

     1,595        (174     1,421        (233     1,188  


 

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2018

(in millions)

 

     New Fox      Carve-out
Adjustments
    New Fox Carve-
out (Subtotal)
     New Fox
Financing and
Pro Forma
Adjustments
     New Fox
Pro Forma
 

Total assets

   $ 13,484      $ (2,901   $ 10,583      $ 5,286      $ 15,869  

Non-current borrowings

     —          —         —          6,452        6,452  


 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following selected unaudited pro forma per share information for the year ended September 30, 2017 and the six-months ended March 31, 2018 reflects the transactions as if they had occurred on October 1, 2016 or October 1, 2017, as applicable. The book value per share amounts in the table below reflect the transactions as if they had occurred on March 31, 2018 or September 30, 2017, as applicable. The information in the table is based on, and should be read together with, and the information is qualified in its entirety by (i) the historical financial information that Disney and 21CF have presented in their respective filings with the SEC and (ii) the financial information contained in the “Unaudited Pro Forma Condensed Combined Financial Data” and the notes thereto included elsewhere in this joint proxy statement/prospectus. See the sections entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus and “Unaudited Pro Forma Condensed Combined Financial Data” beginning on page [●] of this joint proxy statement/prospectus.

The unaudited pro forma combined per share data is presented for illustrative purposes only and is not necessarily indicative of actual or future financial position or results of operations that would have been realized if the transactions had been completed as of the dates indicated or will be realized upon the completion of the transactions.

 

     Historical
Disney
     Unaudited
Pro Forma
Combined
    Equivalent
Basis
Unaudited
Pro Forma
Combined(1)
 

Basic earnings per share attributable to Disney

       

Six Months Ended March 31, 2018

   $ 4.88      $ 3.82     $ 1.40  

Year Ended September 30, 2017

     5.73        3.96       1.45  

Diluted earnings per share attributable to Disney

       

Six Months Ended March 31, 2018

     4.86        3.81       1.39  

Year Ended September 30, 2017

     5.69        3.94       1.44  

Dividends declared per Disney common share

       

Six Months Ended March 31, 2018

     0.84        0.84 (2)      0.31  

Year Ended September 30, 2017

     1.56        1.56 (2)      0.57  

Book value per Disney common share(3)

       

At March 31, 2018

     30.18        48.04       17.56  

At September 30, 2017

     27.23        N/A       N/A  

 

(1)

The per share amounts are calculated by multiplying the unaudited pro forma combined per share amounts by an exchange ratio of 0.3656 shares of New Disney common stock for each share of 21CF common stock, assuming an average Disney stock price of $103.926, which was the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018, and assuming that the tax adjustment amount is zero. The actual exchange ratio may fluctuate with the market price of Disney common stock and, subject to the collar on the exchange ratio, will be determined based on the average Disney stock price. If the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324. If the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to the quotient obtained by dividing (x) $38.00 by (y) the average Disney stock price. If the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063. The 21CF merger consideration in the combination merger agreement was set based on an estimate of $8.5 billion for the transaction tax, and will be adjusted immediately prior to the consummation of the transactions if the final estimate of the transaction tax at closing is more than $8.5 billion or less than $6.5 billion. Such adjustment could increase or decrease the 21CF merger consideration, depending upon whether the final estimate is lower or higher, respectively, than $6.5 billion or $8.5 billion. Additionally, if the final estimate of the tax liabilities is lower than $8.5 billion, Disney will make a cash payment to New



 

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  Fox reflecting the difference between such amount and $8.5 billion, up to a maximum cash payment of $2 billion. Because of this adjustment mechanism, the number of shares of New Disney common stock that 21CF stockholders will receive in the 21CF merger cannot be determined until immediately prior to completion of the 21CF merger. As described below under “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation,” it is likely that final estimate of the tax liabilities taken into account will differ materially from $8.5 billion, which was used to set the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. For further information regarding this adjustment see the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus and the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus.
(2) Amounts are the same as historical cash dividends per share since Disney is not expected to change its dividend policy as a result of the transactions.
(3) The amounts are calculated by dividing (1) total assets less total liabilities, redeemable noncontrolling interest and noncontrolling interest, by (2) total common shares outstanding at each respective date using Disney’s historical outstanding shares for the “Historical Disney” column and using Disney’s historical outstanding shares plus the issuance of 343 million shares of New Disney common stock on a fully diluted basis to the 21CF stockholders for the “Unaudited Pro Forma Combined” column.

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Comparative Per Share Market Price Information

Disney common stock trades on the NYSE under the symbol “DIS”, 21CF class A common stock trades on Nasdaq under the symbol “FOXA” and 21CF class B common stock trades on Nasdaq under the symbol “FOX.” The following table presents the closing prices of Disney common stock and 21CF common stock on November 3, 2017, the last trading day prior to the publication of press reports regarding a potential transaction, December 13, 2017, the last trading day before the public announcement of the original combination merger agreement, and [●], 2018, the last practicable trading day prior to the mailing of this joint proxy statement/prospectus. The table also shows the estimated equivalent per share value of the 21CF merger consideration for each share of 21CF common stock on the relevant date.

 

Date

   FOXA
Closing Price
     FOX
Closing Price
     Disney
Closing Price
     Estimated
Equivalent
Per Share Value(1)(2)
 

November 3, 2017

   $ 24.97      $ 24.43      $ 98.64      $ 38.00  

December 13, 2017

     32.75        32.34        107.61        38.00  

[●], 2018

     [●]        [●]        [●]     

 

(1) The implied value of the 21CF merger consideration represents the per share value based on the closing prices of Disney common stock of $98.64 on November 3, 2017, $107.61 on December 13, 2017 and $[●] on [●], 2018, respectively, and the applicable exchange ratio, assuming that such closing price was equal to the average Disney stock price and assuming that the tax adjustment amount is zero. The value of the 21CF merger consideration may fluctuate with the market price of Disney common stock and, subject to the collar on the exchange ratio, will be determined based on the average Disney stock price. There can be no assurance that the average Disney stock price will be greater or less than, or equal to, $98.64, $107.61 or $[●]. If the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324. If the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to the quotient obtained by dividing (x) $38.00 by (y) the average Disney stock price. If the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063.


 

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(2) The exact value of the merger consideration that 21CF stockholders receive may be subject to the tax adjustment amount, which would be based on the final estimate of the transaction tax. The 21CF merger consideration in the combination merger agreement was set based on an estimate of $8.5 billion for the transaction tax, and will be adjusted immediately prior to the consummation of the transactions if the final estimate of the transaction tax at closing is more than $8.5 billion or less than $6.5 billion. Such adjustment could increase or decrease the 21CF merger consideration, depending upon whether the final estimate is lower or higher, respectively, than $6.5 billion or $8.5 billion. Additionally, if the final estimate of the tax liabilities is lower than $8.5 billion, Disney will make a cash payment to New Fox reflecting the difference between such amount and $8.5 billion, up to a maximum cash payment of $2 billion. Because of this adjustment mechanism, the number of shares of New Disney common stock that 21CF stockholders will receive in the 21CF merger cannot be determined until immediately prior to completion of the 21CF merger. As described below under “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation,” it is likely that final estimate of the tax liabilities taken into account will differ materially from $8.5 billion, which was used to set the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. For further information regarding this adjustment see the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus and the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus.

The above table shows only historical comparisons. These comparisons may not provide meaningful information to Disney stockholders in determining whether to approve the share issuance proposal or 21CF stockholders in determining whether to approve the combination merger proposal, the distribution merger proposal and the 21CF charter amendment proposal. No assurance can be given concerning the market prices of shares of Disney common stock or 21CF common stock before completion of the mergers or shares of New Disney common stock after completion of the mergers. Disney stockholders and 21CF stockholders are urged to obtain current market quotations for Disney common stock, 21CF class A common stock and 21CF class B common stock and to review carefully the other information contained in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus in considering whether to approve the share issuance proposal or to approve the distribution merger proposal, the distribution merger proposal and the 21CF charter amendment proposal, respectively. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.



 

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Comparative Stock Prices and Dividends

The following tables present, for the periods indicated, the high and low sales prices per share for 21CF and Disney common stock and the cash dividends declared per share of 21CF and Disney common stock. This information should be read together with the consolidated financial statements and related notes of 21CF and Disney that are incorporated by reference in this document and with the unaudited pro forma combined financial data included under “Unaudited Pro Forma Condensed Combined Financial Data” beginning on page [●] of this joint proxy statement/prospectus.

 

     Disney common stock  
     High      Low      Cash Dividends
Declared
 

Fiscal Year 2015

        

First quarter

   $ 95.31      $ 78.54      $ 0.66  

Second quarter

     108.94        90.06        —    

Third quarter

     115.28        104.25        0.71  

Fourth quarter

     122.08        90.00        —    

Fiscal Year 2016

        

First quarter

     120.65        102.61        0.71  

Second quarter

     103.43        86.25        —    

Third quarter

     106.75        94.00        0.78  

Fourth quarter

     100.80        91.19        —    

Fiscal Year 2017

        

First quarter

     106.26        90.32        0.78  

Second quarter

     113.71        105.21        —    

Third quarter

     116.10        103.17        0.84  

Fourth quarter

     110.83        96.20        —    

Fiscal Year 2018

        

First quarter

     112.67        96.80        0.84  

Second quarter

     113.19        98.15        —    

Third quarter (Through [●])

     [●]        [●]        —    


 

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     21CF class A common stock  
     High      Low      Cash Dividends
Declared
 

Fiscal Year 2015

        

First quarter

   $ 36.30      $ 31.30      $ 0.125  

Second quarter

     39.01        31.77        —    

Third quarter

     37.85        32.80        0.15  

Fourth quarter

     34.65        32.26        —    

Fiscal Year 2016

        

First quarter

     34.49        25.19        0.15  

Second quarter

     31.28        27.07        —    

Third quarter

     28.23        24.14        0.15  

Fourth quarter

     31.06        26.37        —    

Fiscal Year 2017

        

First quarter

     28.12        23.57        0.18  

Second quarter

     28.64        24.35        —    

Third quarter

     32.44        28.72        0.18  

Fourth quarter

     32.15        26.74        —    

Fiscal Year 2018

        

First quarter

     29.63        25.79        0.18  

Second quarter

     35.24        24.97        —    

Third quarter

     38.81        34.56        0.18  

Fourth quarter (Through [●])

     [●]        [●]        —    

 

     21CF class B common stock  
     High      Low      Cash Dividends
Declared
 

Fiscal Year 2015

        

First quarter

   $ 35.28      $ 31.03      $ 0.125  

Second quarter

     37.50        30.71        —    

Third quarter

     36.52        31.78        0.15  

Fourth quarter

     34.43        31.88        —    

Fiscal Year 2016

        

First quarter

     33.52        25.41        0.15  

Second quarter

     31.50        27.23        —    

Third quarter

     28.21        24.21        0.15  

Fourth quarter

     30.93        26.26        —    

Fiscal Year 2017

        

First quarter

     28.62        24.12        0.18  

Second quarter

     28.48        24.68        —    

Third quarter

     31.82        28.00        0.18  

Fourth quarter

     31.57        26.53        —    

Fiscal Year 2018

        

First quarter

     29.22        25.38        0.18  

Second quarter

     34.72        24.43        —    

Third quarter

     38.40        34.09        0.18  

Fourth quarter (Through [●])

     [●]        [●]        —    


 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information set forth, and the documents to which 21CF, Disney and New Disney refer you, in this registration statement, of which this joint proxy statement/prospectus forms a part, including financial estimates and statements as to the expected timing, completion and effects of the transactions between Disney and 21CF constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the rules, regulations and releases of the Securities and Exchange Commission. These forward-looking statements are subject to risks and uncertainties, and actual results might differ materially from those discussed in, or implied by, the forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the transactions, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based on the current beliefs and expectations of the management of 21CF and Disney and are subject to significant risks and uncertainties outside of our control.

Statements included in or incorporated by reference into this registration statement, of which this joint proxy statement/prospectus forms a part, that are not historical facts, including statements about the beliefs and expectations of the managements of 21CF and Disney, are forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act and Section 21E of the Exchange Act. In this context, forward-looking statements often address expected future business and financial performance and financial condition. Words such as “believes,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “aims,” “potential,” “will,” “would,” “could,” “considered,” “likely,” “estimate” and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. While 21CF and Disney believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the control of Disney and 21CF. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on future circumstances that may or may not occur. Actual results may differ materially from the current expectations of 21CF and Disney depending on a number of factors affecting their businesses and risks associated with the successful execution of the transactions and the integration and performance of their businesses following the transactions. These factors include, but are not limited to, risks and uncertainties detailed in Disney’s periodic public filings with the SEC, including those discussed under the sections entitled “Risk Factors” in Disney’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and Disney’s Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2017 and in 21CF’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and 21CF’s Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2017, December 31, 2017 and March 31, 2018, factors contained or incorporated by reference into such documents and in subsequent filings by Disney and 21CF with the SEC, and the following factors:

 

    the completion of the proposed transactions may not occur on the anticipated terms and timing or at all;

 

    the required regulatory approvals may not be obtained, or in order to obtain such regulatory approvals, conditions may be imposed that adversely affect the anticipated benefits from the proposed transactions or cause the parties to abandon the proposed transactions;

 

    the risk that a condition to closing of the transactions may not be satisfied (including, but not limited to, the receipt of legal opinions with respect to the treatment of certain aspects of the transactions under U.S. and Australian tax laws);

 

    the risk that the anticipated tax treatment of the transactions is not obtained;

 

    an increase or decrease in the anticipated transaction taxes (including due to any changes to tax legislation and its impact on tax rates (and the timing of the effectiveness of any such changes)) to be paid in connection with the separation prior to the closing of the transactions could cause an adjustment to the number of New Disney shares and the cash amount to be paid to holders of 21CF’s common stock;

 

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    failure to realize the benefits expected from the transactions;

 

    potential litigation relating to the proposed transactions that could be instituted against 21CF, Disney or their respective directors;

 

    potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transactions;

 

    risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transactions;

 

    negative effects of the announcement or the completion of the transactions on the market price of Disney’s common stock or New Disney’s common stock;

 

    negative effects of the announcement or the completion of the transactions on 21CF’s and Disney’s operating results and businesses generally;

 

    risks relating to the value of the shares of New Disney common stock to be issued in the transactions and uncertainty as to the long-term value of New Disney’s common stock;

 

    the potential impact of unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition and losses on the future prospects, business and management strategies for the management, expansion and growth of New Disney’s operations after the completion of the transactions and on the other conditions to the completion of the merger;

 

    the risks and costs associated with, and the ability of New Disney to, integrate the businesses successfully and to achieve anticipated synergies;

 

    the risk that disruptions from the proposed transactions will harm 21CF’s or Disney’s business, including current plans and operations;

 

    the ability of 21CF or Disney to retain and hire key personnel;

 

    adverse legal and regulatory developments or determinations or adverse changes in, or interpretations of, U.S., Australian or other foreign laws, rules or regulations, including tax laws, rules and regulations, that could delay or prevent completion of the proposed transactions or cause the terms of the proposed transactions to be modified;

 

    the ability of the parties to obtain or consummate financing or refinancing related to the transactions upon acceptable terms or at all;

 

    management’s response to any of the aforementioned factors.

Consequently, all of the forward-looking statements 21CF or Disney make in this document are qualified by the information contained in or incorporated by reference into this joint proxy statement/prospectus, including, but not limited to (i) the information contained under this heading and (ii) the information discussed under the sections entitled “Risk Factors” in Disney’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 and Disney’s Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2017 and in 21CF’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and 21CF’s Quarterly Reports on Form 10-Q for the quarterly periods ended September 30, 2017, December 31, 2017 and March 31, 2018. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

Except as otherwise required by law, neither Disney nor 21CF is under any obligation, and each expressly disclaim any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this announcement are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.

 

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RISK FACTORS

In addition to the other information contained or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [] of this joint proxy statement/prospectus, you should carefully consider the following risk factors in deciding how to vote.

RISK FACTORS RELATING TO THE TRANSACTIONS

The per share value of the 21CF merger consideration is based, in part, on an exchange ratio. Because the market price of Disney common stock will fluctuate, 21CF stockholders cannot be certain of the amount of cash or the number or value of the shares of New Disney common stock to be delivered upon consummation of the transactions.

The per share value of the 21CF merger consideration may fluctuate with the market price of Disney common stock and, subject to the collar on the exchange ratio, will be determined based on the average Disney stock price. Subject to the election, proration and adjustment procedures set forth in the combination merger agreement and described in the section entitled “The Combination Merger Agreement—Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus, each share of 21CF common stock will be exchanged for the per share value, payable in cash or shares of New Disney common stock, equal to fifty percent of the sum of (i) $38.00, which we refer to as the per share cash amount, plus (ii) the value (determined based on the average Disney stock price) of a number of shares of Disney common stock equal to the exchange ratio. The exchange ratio is established in accordance with the combination merger agreement and may be fixed or float depending on the average Disney stock price. The exchange ratio in the combination merger agreement will be determined pursuant to a collar as follows: (i) if the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324, (ii) if the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to the quotient obtained by dividing (x) $38.00 by (y) the average Disney stock price or (iii) if the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063. The per share value will fluctuate with the market price of Disney common stock to the extent the average Disney stock price is greater than $114.32 or less than $93.53. Therefore, the actual number of shares and the value of the 21CF merger consideration delivered to 21CF stockholders after the completion of the transactions will fluctuate depending on the average Disney stock price. Accordingly, 21CF stockholders cannot be certain of the amount of cash or the number or value of the shares of New Disney common stock to be delivered upon consummation of the transactions.

Assuming an average Disney stock price of $103.926, which was the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018, and assuming that the tax adjustment amount is zero, the 21CF merger consideration represented an implied value of $38.00 per share, and holders of 21CF common stock would receive, subject to proration, $38.00 in cash per share of 21CF common stock for which a cash election is made, and 0.3656 shares of New Disney common stock for each share of 21CF common stock for which a stock election is made. 21CF class A common stock and 21CF class B common stock are currently traded on Nasdaq under the symbol “FOXA” and “FOX,” respectively, and Disney common stock is currently traded on the New York Stock Exchange under the symbol “DIS.” We encourage you to obtain current market quotes for 21CF common stock and Disney common stock before you determine how to vote on the proposals set forth in this joint proxy statement/prospectus.

The 21CF merger consideration may be subject to an adjustment based on an estimate of certain tax liabilities arising from the separation and the distribution and the other transactions contemplated by the combination merger agreement. Because of this adjustment, the value of the 21CF merger consideration cannot be determined until immediately prior to completion of the transactions.

The 21CF merger consideration was set based on an estimate of $8.5 billion for the transaction tax, and will be adjusted immediately prior to the consummation of the transactions if the final estimate of the transaction tax

 

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at closing is more than $8.5 billion or less than $6.5 billion. Such adjustment could increase or decrease the 21CF merger consideration, depending upon whether the final estimate is lower or higher, respectively, than $6.5 billion or $8.5 billion. Additionally, if the final estimate of the tax liabilities is lower than $8.5 billion, Disney will make a cash payment to New Fox reflecting the difference between such amount and $8.5 billion, up to a maximum cash payment of $2 billion. As described below under “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation”, it is likely that the final estimate of the tax liabilities taken into account for purposes of the tax adjustment amount will differ materially from the amount estimated for purposes of setting the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration.

Following the execution of the original combination merger agreement, the United States enacted new tax legislation on December 22, 2017 that, among other things, reduced the maximum corporate income tax rate from 35% to 21%. Holding all other things equal, this change in tax rates will result in a significantly lower spin tax, and by extension a lower transaction tax, than the one estimated when the exchange ratio under the original combination merger agreement was set.

The final estimate of the transaction tax at closing is subject to a number of uncertainties, including that such estimate will be based on: (i) tax rates in effect on the closing date; (ii) a model to be developed by 21CF and Disney in good faith that will include reasonable estimates and assumptions with respect to matters such as the liabilities of the New Fox business and 21CF’s basis in the assets of the New Fox business on the date of the distribution; (iii) the volume weighted average trading price of New Fox stock on the date of the distribution; and (iv) the tax effect of certain divestitures and the operations of the New Fox business, none of which can be known at this time. Accordingly, at the time of the 21CF special meeting, 21CF stockholders will not know, or be able to determine, the number or value of the shares of New Disney common stock or the amount of cash that will be issued and delivered to 21CF stockholders upon the consummation of the transactions.

Substantial uncertainty exists regarding the final estimate of the transaction tax. Disney and 21CF do not currently have the information necessary to determine the final estimate of the transaction tax, and will not have such information at the time of the Disney special meeting or the 21CF special meeting. Neither 21CF nor Disney will resolicit votes from their respective stockholders once the distribution has been effected, the final estimate of the transaction tax has been made and the tax adjustment amount (if any) has been calculated. If there is a downward adjustment to the 21CF merger consideration, both the 21CF stock consideration and 21CF cash consideration will be reduced.

See the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21 CF merger consideration and the amount of the cash payment to changes in the amount of the transaction tax and the average Disney stock price.

The market price of New Disney common stock after the consummation of the transactions will continue to fluctuate, and may be affected by factors different from those affecting shares of 21CF common stock currently.

Upon the consummation of the 21CF merger, holders of 21CF common stock who receive the 21CF stock consideration will become holders of shares of New Disney common stock. The market price of New Disney common stock may fluctuate significantly following consummation of the transactions and holders of 21CF common stock could lose the value of their investment in New Disney common stock. The issuance of shares of New Disney common stock in the 21CF merger could on its own have the effect of depressing the market price for New Disney common stock. In addition, many 21CF stockholders may decide not to hold the shares of New Disney common stock they receive as a result of the 21CF merger. Other 21CF stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of New Disney common stock they receive as a result of the 21CF merger. Such sales of New Disney common stock may take place shortly following consummation of the transactions and could have the effect of depressing the market

 

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price for New Disney common stock. Moreover, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, New Disney common stock, regardless of New Disney’s actual operating performance.

The businesses of New Disney will differ from those of 21CF in important respects, and, accordingly, the results of operations of New Disney after the transactions, as well as the market price of New Disney common stock, may be affected by factors different from those currently affecting the results of operations of 21CF. Following the consummation of the transactions, 21CF will be part of a larger company with other lines of business, so decisions affecting 21CF may be made based on considerations relating to the larger combined business as a whole rather than the 21CF business individually. For further information on the businesses of Disney and 21CF and certain factors to consider in connection with those businesses, see the documents incorporated by reference into this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

21CF stockholders may receive a form or combination of consideration different from what they elect.

Under the combination merger agreement, New Disney and Disney will deliver an aggregate of $35.7 billion in cash to 21CF stockholders pursuant of the 21CF merger (before giving effect to the tax adjustment amount). In order to deliver this aggregate cash amount, the combination merger agreement provides for pro rata adjustments to and reallocation of the cash and stock elections made by 21CF stockholders, as well as the allocation of consideration to be paid with respect to shares of 21CF common stock owned by 21CF stockholders who fail to make an election, which we refer to as no election shares. No election shares will be exchanged for the 21CF cash consideration, the 21CF stock consideration or a combination of both. Accordingly, depending on the elections made by other 21CF stockholders, each 21CF stockholder who elects to receive New Disney common stock for all of its shares in the 21CF merger may receive a portion of its consideration in cash, and each 21CF stockholder who elects to receive cash for all of its shares in the 21CF merger may receive a portion of its consideration in New Disney common stock. For further information, see the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus.

If 21CF stockholders sell shares of 21CF common stock as to which they have already made an election, such transfer shall be deemed a revocation of their election.

A 21CF stockholder who wants to elect to receive the 21CF cash consideration or the 21CF stock consideration in exchange for such stockholder’s shares of 21CF common stock must deliver to the exchange agent by the election deadline a properly completed election form. Following the delivery of a completed election form, such 21CF stockholder may transfer such shares. However, any transfer made on the stock transfer books of 21CF will be deemed to be a revocation of their election.

The transactions may cause disruption in 21CF’s and Disney’s respective businesses.

The combination merger agreement generally requires 21CF to operate its business in the ordinary course pending consummation of the 21CF merger and restricts 21CF, without Disney’s consent, from taking certain specified actions until the transactions are consummated or the combination merger agreement is terminated, including making certain acquisitions and divestitures, entering into certain contracts, incurring certain indebtedness and expenditures, paying dividends in excess of certain thresholds, and repurchasing or issuing securities outside of existing equity award programs. These restrictions may affect 21CF’s ability to execute its business strategies and attain its financial and other goals and may impact its financial condition, results of operations and cash flows.

In connection with the transactions, current and prospective employees of 21CF and Disney may experience uncertainty about their future roles with 21CF, New Disney or New Fox following the consummation of the

 

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transactions, which may materially adversely affect the ability of 21CF and Disney to attract, retain and motivate key personnel while the transactions are pending. Despite 21CF’s retention planning and programs that each of 21CF and Disney has and will implement, key employees may depart because of issues relating to the uncertainty and difficulty of integration with New Disney and the separation and establishment of New Fox, or a desire not to remain with 21CF, New Disney or New Fox following the consummation of the transactions. Accordingly, no assurance can be given that 21CF or Disney will be able to attract and retain key employees to the same extent that each has been able to in the past.

In addition, certain key employees of 21CF are entitled to receive severance payments and benefits on covered terminations of employment, including, in certain cases, as a result of certain changes in such key employees’ duties, responsibilities, status, title, authority, reporting relationship, compensation, benefits, perquisites or primary office location. Such circumstances could occur in connection with the transactions, including as a result of changes in roles and responsibilities. See the sections entitled “21CF Proposal No. 5— Non-binding, Advisory Vote on Transactions-Related Compensation for 21CF’s Named Executive Officers” beginning on page [●] of this joint proxy statement/prospectus and “Interests of 21CF’s Directors and Executive Officers in the Transactions” beginning on page [●] of this joint proxy statement/prospectus for a further discussion of potential severance payments and benefits.

The transactions further could cause disruptions to the businesses or business relationships of 21CF and Disney (including the business to be conducted by, and business relationships of, New Fox after the consummation of the transactions), which could have an adverse impact on the businesses, financial condition, results of operations or prospects of the companies, including an adverse effect on New Disney’s ability to realize the anticipated benefits of the transactions. In addition, the risk, and adverse effect, of such disruptions could be exacerbated by a delay in the consummation of the transactions or a termination of the combination merger agreement. Parties with which 21CF or Disney has business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with 21CF or Disney. Parties with whom 21CF or Disney otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The pursuit of the transactions and the preparation for both the integration with New Disney and the establishment of New Fox may place a significant burden on 21CF and Disney management and internal resources. The diversion of 21CF and Disney management’s attention away from day-to-day business concerns could adversely affect 21CF’s and Disney’s financial results.

21CF and Disney have each incurred and expect to continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the transactions. 21CF and Disney may also incur unanticipated costs in the integration of the businesses of 21CF and New Disney. The substantial majority of these costs will be non-recurring expenses relating to the transactions, including costs relating to the separation, and many of these costs are payable regardless of whether the transactions are consummated. 21CF, Disney or New Disney also could be subject to litigation related to the transactions, which could result in significant costs and expenses. Even if the transactions are not consummated, these risks may materialize and may adversely affect 21CF’s and Disney’s businesses, financial condition, financial results and stock prices.

Failure to complete the transactions in a timely manner or at all could negatively impact the market price of the common stock of 21CF or Disney, as well as the future business and its financial condition, results of operations and cash flows of 21CF, Disney or New Disney.

21CF and Disney currently expect that the transactions will be completed within 6-12 months after June 20, 2018, but cannot be certain when or if the conditions for the transactions will be satisfied or (if permissible under

 

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applicable law) waived. The transactions cannot be consummated until the conditions to closing are satisfied or (if permissible under applicable law) waived, including:

 

    the adoption of the combination merger agreement, the adoption of the distribution merger agreement and the approval of the 21CF charter amendment by the requisite vote of the 21CF stockholders and the approval of the stock issuance by the requisite vote of Disney stockholders,

 

    receipt of certain required governmental approvals and consents,

 

    receipt by 21CF of a surplus and solvency opinion with respect to the separation and the cash dividend in connection with the transactions,

 

    effectiveness of registration statements with respect to the distribution and the issuance of New Disney common stock in connection with the transactions,

 

    authorization of New Disney and New Fox shares for listing on the NYSE and Nasdaq, as applicable,

 

    the consummation of the separation and distribution,

 

    receipt of certain tax opinions by each of 21CF and Disney with respect to the treatment of the transactions under U.S. and Australian tax laws, including legal opinions on the intended tax treatment of the transactions, and

 

    the accuracy of the representations and warranties made by 21CF or Disney, as applicable, in the combination merger agreement.

The obligation of Disney to consummate the transactions is also subject to, among other conditions, the absence of regulatory authorities requiring Disney to take certain actions. See the section entitled “The Transactions—Regulatory Approvals” beginning on page [●] of this joint proxy statement/prospectus for additional information concerning Disney’s and 21CF’s respective obligations to obtain regulatory approval of the transactions. For a more complete summary of the conditions that must be satisfied or waived prior to consummation of the transactions, see the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

The satisfaction of the required conditions could delay the consummation of the transactions for a significant period of time or prevent the transactions from occurring. Any delay in consummating the transactions could cause New Disney not to realize some or all of the benefits that Disney currently expects New Disney to achieve if the transactions are successfully consummated within its expected timeframe. Further, there can be no assurance that the conditions to the consummation of the transactions will be satisfied or waived or that the transactions will be consummated.

In the event that the transactions are not consummated for any reason, (1) the holders of 21CF common stock will not receive any consideration for their shares of 21CF common stock in connection with the transactions, (2) the separation and distribution of New Fox will not occur and the holders of 21CF common stock will not receive shares of common stock of New Fox and (3) the Disney merger will not occur and Disney stockholders will continue to hold shares of Disney stock rather than receiving shares of New Disney stock. Instead, 21CF will remain an independent public company, Disney common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act, 21CF class A common stock and 21CF class B common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and Disney and 21CF will continue to file periodic reports with the SEC.

Additionally, if the transactions are not consummated in a timely manner or at all, the ongoing businesses of 21CF and Disney may be adversely affected as follows:

 

    21CF and Disney may experience negative reactions from the financial markets, including negative impacts on their respective stock price;

 

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    21CF and Disney may experience negative reactions from their respective employees, customers, suppliers or other third parties;

 

    The focus of 21CF and Disney management would have been diverted from pursuing other opportunities that could have been beneficial to 21CF or Disney; and

 

    21CF’s and Disney’s respective costs of pursuing the transactions may be higher than anticipated and, in any event, would be borne entirely by 21CF or Disney, as applicable.

If the transactions are not completed, there can be no assurance that these risks will not materialize and will not materially adversely affect 21CF’s or Disney’s respective stock price, business, financial conditions, results of operations or cash flows. Disney may be required, under certain circumstances, to pay 21CF a termination fee equal to $1.525 billion, or in connection with a termination under certain specified circumstances in connection with the failure to obtain regulatory approvals, $2.5 billion. In addition, 21CF may be required, under certain circumstances, to pay Disney a termination fee equal to $1.525 billion.

21CF or Disney may waive one or more of the conditions to the closing of the transactions, or in certain circumstances, one or more of the conditions to the closing of the transactions may be deemed satisfied, without re-soliciting stockholder approval.

21CF or Disney may determine to waive one or more of the conditions, in whole or in part, (or, as discussed in the next two paragraphs, in certain circumstances, one or more of the conditions may be deemed satisfied), to its obligation to effect the transactions. Each of 21CF and Disney currently expect to evaluate the materiality of any waiver and its effect on 21CF stockholders or Disney stockholders, as applicable, in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies or voting cards is required in light of such waiver. Any determination whether to waive any condition to the closing of the transactions or as to re-soliciting stockholder approval or amending this joint proxy statement/prospectus as a result of a waiver will be made by 21CF or Disney, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

However, there are certain circumstances in which specific conditions to the closing of the transactions may be deemed satisfied. In particular, the condition for Disney to receive the hook stock legal comfort may be deemed satisfied in certain circumstances described in further detail under “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus.

IN ANY INSTANCE DESCRIBED ABOVE WHERE SUCH CERTAIN CONDITIONS WILL BE DEEMED SATISFIED, NEITHER 21CF NOR DISNEY WILL AMEND THIS JOINT PROXY STATEMENT/PROSPECTUS OR RE-SOLICIT PROXIES OR STOCKHOLDER APPROVAL.

In order to consummate the transactions, Disney and 21CF must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions, consummation of the transactions may be jeopardized or the anticipated benefits of the transactions could be reduced.

Although Disney and 21CF have agreed to use reasonable best efforts, subject to certain limitations, to make certain governmental filings and obtain the governmental approvals or expirations or earlier termination of applicable waiting periods, as the case may be, there can be no assurance that the applicable waiting periods will expire or be terminated or that the applicable approvals will be obtained. As a condition to approving the transactions, governmental authorities may impose conditions, terms, obligations or restrictions or require divestitures or place restrictions on the conduct of the combined company’s business after consummation of the transactions, including those which Disney may not be required to accept pursuant to the terms of the combination merger agreement. Disney has agreed to accept certain restrictions on certain of its and 21CF’s assets if and to the extent necessary to obtain the governmental regulatory approvals required to consummate the

 

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transactions, as described in the section entitled “The Transactions— Regulatory Approvals” beginning on page [●] of this joint proxy statement/prospectus. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying or preventing consummation of the transactions or imposing additional material costs on or materially limiting the revenues of the combined company following the transactions, or otherwise adversely affecting, including to a material extent, the combined company’s businesses and results of operations after consummation of the transactions. If 21CF and Disney are required to divest assets or businesses, there can be no assurance that they will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. In addition, we can provide no assurance that these conditions, terms, obligations or restrictions will not result in the abandonment of the transactions. See the sections entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” and “The Transactions—Regulatory Approvals” beginning on pages [●] and [●], respectively, of this joint proxy statement/prospectus.

21CF’s directors and executive officers have interests in the transactions that may be different from your interests as a stockholder of 21CF.

In considering the recommendations of the 21CF board to approve the combination merger proposal, the distribution merger proposal, the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal, 21CF stockholders should be aware that directors and executive officers of 21CF have certain interests in the transactions that may be different from, or in addition to, the interests of 21CF stockholders, generally. These interests include the treatment in the transactions of 21CF equity compensation awards, the employment agreements, retention awards, severance and certain other rights held by 21CF’s directors and executive officers, and the indemnification of former 21CF directors and executive officers by Disney. See the sections entitled “21CF Proposal No. 5—Non-Binding, Advisory Vote on Transactions-Related Compensation for 21CF’s Named Executive Officers” beginning on page [●] of this joint proxy statement/prospectus and “Interests of 21CF’s Directors and Executive Officers in the Transactions” beginning on page [●] of this joint proxy statement/prospectus for a more detailed description of these interests. The 21CF board was aware of these interests and considered them, among other things, in evaluating and approving the combination merger agreement and the transactions and in recommending that the 21CF stockholders adopt the combination merger agreement, adopt the distribution merger agreement and approve the 21CF charter amendment.

Disney’s directors and executive officers have interests in the transactions that may be different from your interests as a stockholder of Disney.

In considering the recommendations of the Disney board to approve the share issuance proposal and the Disney adjournment proposal, Disney stockholders should be aware that directors and executive officers of Disney have certain interests in the transactions that may be different from or in addition to the interests of Disney stockholders generally. These interests include the extension of the period during which Robert A. Iger, Disney’s Chairman and Chief Executive Officer, would remain employed with Disney and continue to serve as Chairman and Chief Executive Officer if the mergers are completed. See the section entitled “Interests of Disney’s Directors and Executive Officers in the Transactions” beginning on page [●] of this joint proxy statement/prospectus for a more detailed description of these interests. The Disney board was aware of these interests and considered them, among other things, in evaluating the combination merger agreement and the transactions and in recommending that the Disney stockholders approve the share issuance proposal.

The combination merger agreement contains provisions that could discourage a potential competing acquiror of 21CF or Disney.

The combination merger agreement contains “no shop” provisions that, subject to limited exceptions, restrict each of 21CF’s and Disney’s ability to solicit, initiate, or knowingly encourage or facilitate competing third-party proposals for the acquisition of 21CF or Disney stock or assets. In addition, before the 21CF board or

 

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the Disney board withdraws, qualifies or modifies its recommendation of the transactions or terminates the combination merger agreement to enter into a superior proposal, the other party generally has an opportunity to offer to modify the terms of the transactions. In certain circumstances, upon termination of the combination merger agreement, one party will be required to pay the other a termination fee of $1.525 billion.

These provisions could discourage a potential third-party that might have an interest in making a competing proposal, even if such third-party were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the transactions, or might otherwise result in a potential third-party proposing to pay a lower price to 21CF or Disney stockholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

If the combination merger agreement is terminated and 21CF or Disney decides to seek another business combination, it may not be able to negotiate or consummate transactions with another party on terms comparable to, or better than, the terms of the combination merger agreement. In certain circumstances, 21CF or Disney would be required to pay to the other a termination fee of $1.525 billion if such a business combination is agreed to or consummated within 12 months after such termination.

If the mergers, taken together, do not qualify as a transaction described in Section 351 of the Code, 21CF stockholders may be required to pay substantial U.S. federal income taxes.

21CF’s obligation to complete the transactions is conditioned on its receipt of an opinion of Skadden, which we refer to as the Skadden tax opinion, to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the mergers, taken together, will qualify as a transaction described in Section 351 of the Code. The Skadden tax opinion will not address any U.S. state, local or foreign tax consequences and will be based on, among other things, the law in effect on the closing of the transactions and on certain representations made by representatives of 21CF and Disney. Any change in applicable law, which may be retroactive, or the failure of any such representations or assumptions to be true, correct and complete in all material respects, could adversely affect the conclusions reached in the Skadden tax opinion. Moreover, the Skadden tax opinion will not be binding on the Internal Revenue Service, which we refer to as the IRS, or the courts, and the IRS or a court may not agree with the conclusions reached in the Skadden tax opinion.

If the mergers were determined not to qualify as a transaction described in Section 351 of the Code, a U.S. holder (as defined below in the section entitled “Material United States Federal Income Tax Consequences”) would recognize gain or loss with respect to all of such holder’s shares of 21CF common stock exchanged in the 21CF merger equal to the difference between (1) the aggregate amount of cash and the fair market value of the New Disney common stock received and (2) such holder’s adjusted tax basis in the 21CF common stock exchanged therefor. For a more detailed discussion of the consequences of the 21CF merger to U.S. holders, see the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

If the mergers, taken together, do not qualify as a transaction described in Section 351 of the Code, Disney stockholders may be required to pay substantial U.S. federal income taxes.

Disney’s obligation to complete the transactions is conditioned on its receipt of an opinion of Cravath, which we refer to as the Cravath tax opinion, to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the mergers, taken together, will qualify as a transaction described in Section 351 of the Code. The Cravath tax opinion will not address any U.S. state or local or foreign tax consequences and will be based on, among other things, the law in effect on the closing of the transactions and on certain representations made by representatives of 21CF and Disney. Any change in applicable law, which may be retroactive, or the failure of any such representations or assumptions to be true, correct and complete in all material respects, could adversely affect the conclusions reached in the Cravath tax opinion. Moreover, the

 

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Cravath tax opinion will not be binding on the IRS, or the courts, and the IRS or a court may not agree with the conclusions reached in the Cravath tax opinion.

If the mergers were determined not to qualify as a transaction described in Section 351 of the Code, a U.S. holder (as defined below in the section entitled “Material United States Federal Income Tax Consequences”) would recognize gain or loss with respect to all of such holder’s shares of Disney common stock exchanged in the Disney merger equal to the difference between (1) the fair market value of the New Disney common stock received and (2) such holder’s adjusted tax basis in the Disney common stock exchanged therefor. For a more detailed discussion of the consequences of the Disney merger to U.S. holders, see the section entitled “Material United States Federal Income Tax Consequences” beginning on page [●] of this joint proxy statement/prospectus.

Unless the hook stock shares are eliminated, the transactions are conditioned on the receipt of Australian and U.S. tax opinions in respect of the hook stock shares, which, if not obtained, could result in significant taxes and significant indemnification obligations by New Fox.

Disney’s obligation to complete the transactions if the hook stock shares are not eliminated is conditioned on its receipt of written opinions from its Australian tax advisors (Greenwoods & Herbert Smith Freehills Pty Limited, or an Australian senior barrister of Disney’s choice) and U.S. tax advisors (Cravath) to the effect that (i) either (A) there has been no change in Australian tax law since the execution of the combination merger agreement that would cause any of the conclusions expressed in the signing date tax opinion (as defined in the section entitled “The Combination Merger Agreement—Representations and Warranties”) to change, or (B) if there has been a change in Australian tax law, the 21CF charter amendment, the distribution and the mergers (or any alternative transactions) should not result in any hook stock tax under Australian tax law, each of which we refer to as the Australian tax opinion, and (ii) the distribution and the mergers will result in no recognition of gain or loss in respect of the hook stock shares for U.S. federal income tax purposes, which we refer to as the U.S. tax opinion. These opinions will be based on facts, representations and assumptions set forth or referred to in the opinions. Any change in applicable law, which may be retroactive, or the failure of any such representations or assumptions to be true, correct and complete in all material respects, could adversely affect the conclusions reached in these tax opinions. Moreover, the Australian tax opinion and U.S. tax opinion will not be binding on the taxing authority or the courts of the relevant jurisdiction, which may not agree with the conclusions reached therein. In such a case, significant taxes may be imposed on the holders of hook stock shares, 21CF or New Disney as a result of the transactions. Additionally, if Disney’s Australian tax advisor is unable to deliver the Australian tax opinion for whatever reason, then, in certain circumstances and subject to certain limitations, the condition to receive the Australian tax opinion will be deemed satisfied and New Fox will be obligated to indemnify Disney for a portion of any hook stock tax that is actually imposed in respect of the hook stock shares as a result of the transactions. For additional information in respect of New Fox’s indemnification obligations, see “The Combination Merger Agreement—Other Agreements—Tax Matters Agreement” beginning on page [●] of this joint proxy statement/prospectus.

The shares of New Disney common stock to be received by 21CF stockholders as a result of the transactions will have rights different from the shares of 21CF common stock.

Upon consummation of the transactions, 21CF stockholders will no longer be stockholders of 21CF, and 21CF stockholders who receive the 21CF stock consideration will instead become New Disney stockholders, and their rights as stockholders will be governed by the terms of the New Disney charter and the New Disney bylaws. The terms of the New Disney charter and the New Disney bylaws are in some respects different from the terms of the 21CF charter and the 21CF bylaws, which currently govern the rights of 21CF stockholders. See the section entitled “Comparison of Stockholders’ Rights” beginning on page [●] of this joint proxy statement/prospectus for a discussion of the difference in rights associated with New Disney common stock.

 

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The unaudited pro forma condensed combined financial data included in this joint proxy statement/prospectus are presented for illustrative purposes only and the actual financial condition and results of operations of New Disney and New Fox following the transactions may each differ materially.

The unaudited pro forma condensed combined financial data of New Disney, RemainCo and New Fox contained in this joint proxy statement/prospectus are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates and may not be an indication of the applicable company’s financial condition or results of operations following the transactions for several reasons. The actual financial condition and results of operations of New Disney and New Fox following the transactions may not be consistent with, or evident from, the unaudited pro forma condensed combined financial data presented herein. In addition, the assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the applicable company’s financial condition or results of operations following the transactions. Any potential decline in the applicable company’s financial condition or results of operations may cause significant variations in the stock price of the applicable company.

In addition, the unaudited pro forma condensed combined financial data of New Disney reflect adjustments, which are based upon preliminary estimates, to record the 21CF identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in this document is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of 21CF as of the date of the completion of the transactions. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. Furthermore, the unaudited pro forma condensed combined financial data included in this joint proxy statement/prospectus assume that no divestitures or other operating restrictions will be required in order to obtain the regulatory approvals required to complete the transactions. Significant divestitures or other restrictions may be required to obtain the necessary regulatory approvals, and consequently, New Disney may be less able to realize the anticipated benefits of the transactions, and the business and results of operations of the combined company after the transactions may be adversely affected.

For more information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Data of Disney” beginning on page [●] and the section entitled “Unaudited Pro Forma Condensed Combined Financial Data of New Fox” beginning on page [●] of this joint proxy statement/prospectus.

Upon consummation of the transactions, New Fox will be a new publicly traded company with no operating history and New Fox may be unable to successfully operate as a stand-alone, publicly traded company.

Prior to the transactions, the New Fox businesses existed as a component of 21CF. Following consummation of the transactions, New Fox will own and operate the New Fox businesses under a new publicly-traded company. New Fox will be a new public company that will have no operating history as an independent public company and there will be many costs and expenses associated with New Fox running its business similar to how 21CF operated prior to the transactions. Because the New Fox business has not been operated as a stand-alone company, there can be no assurance that New Fox will be able to implement the changes necessary to successfully operate independently or that New Fox will not incur additional costs operating independently that would have a negative effect on New Fox’s business, results of operations or financial condition. In addition, prior to the distribution, New Fox will pay to 21CF a dividend in the amount of $8.5 billion. New Fox will incur indebtedness sufficient to fund the dividend, which indebtedness will be reduced after the 21CF merger by the amount of the cash payment.

New Fox may be unable to achieve some or all of the expected benefits that it expects to achieve in connection with the transactions.

By separating from 21CF there is a risk that New Fox may be more susceptible to market fluctuations and other adverse events than New Fox would have otherwise been while it was still part of 21CF. As part of 21CF, New Fox enjoyed certain benefits from 21CF’s operating diversity and access to capital for investments, which benefits will no longer be available to 21CF after New Fox separates.

 

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As an independent, publicly-traded company, it is expected that New Fox will benefit from, among other things, sharpened focus on the financial and operational resources of the New Fox businesses, allowing management of New Fox to design and implement a capital structure, corporate strategies and policies that are based primarily on the business characteristics and strategic opportunities of the New Fox businesses. It is anticipated that this will allow New Fox to respond more effectively to industry dynamics and to create effective incentives for management and employees that are more closely tied to New Fox’s business performance. However, New Fox may not be able to achieve some or all of the benefits expected to be achieved as a new company or such benefits may be delayed or may not occur at all.

There is no existing market for New Fox common stock, and a trading market that will provide holders of New Fox common stock with adequate liquidity may not develop. In addition, once New Fox common stock begins trading, the market prices of New Fox common stock may fluctuate significantly.

There is currently no public market for shares of New Fox common stock. There can be no assurance that an active trading market for New Fox common stock will develop as a result of consummation of the transactions or in the future. The lack of an active trading market may make it more difficult for holders of New Fox common stock to sell shares of New Fox common stock and could lead to depressed or volatile share prices.

It is impossible to predict the prices at which New Fox common stock may trade after consummation of the transactions. The market price of New Fox common stock may fluctuate significantly, depending upon many factors, some of which may be beyond control, including: (1) a shift in investor base; (2) quarterly or annual earnings, or those of other companies in our industry; (3) actual or anticipated fluctuations in operating results; (4) success or failure of business strategy; (5) ability to obtain financing as needed; (6) changes in accounting standards, policies, guidance, interpretations or principles; (7) changes in laws and regulations affecting the New Fox businesses; (8) announcements by New Fox or competitors of significant new business developments or customers; (9) announcements by New Fox or competitors of significant acquisitions or dispositions; (10) the failure of securities analysts to cover New Fox common stock after the distribution; (11) changes in earnings estimates by securities analysts or New Fox’s ability to meet our earnings guidance; (12) the operating and stock price performance of other comparable companies; (13) results from material litigation or governmental investigations; (14) changes in capital gains taxes and taxes on dividends affecting stockholders; and (15) overall market fluctuations and general economic conditions.

Furthermore, New Fox’s business profile and market capitalization may not fit the investment objectives of many 21CF stockholders and, as a result, these stockholders may sell shares of New Fox common stock after consummation of the transactions.

Disney may encounter difficulty or high costs associated with financing the 21CF cash consideration.

Disney and New Disney expect to fund the 21CF cash consideration (approximately $35.7 billion) upon completion of the mergers through the issuance of senior unsecured notes and/or commercial paper. Such contemplated financing is backstopped by a 364-day unsecured bridge term loan facility to be provided by a five bank syndicate totaling $35.7 billion. Disney’s and/or New Disney’s ability to obtain additional debt financing will be subject to various factors, including market conditions, operating performance and Disney’s and/or New Disney’s ability to incur additional debt. Depending on these factors, the terms upon which debt financing or debt offerings are available to Disney and New Disney may be less favorable to Disney and New Disney than the terms assumed for purposes of preparing the unaudited pro forma condensed combined financial information included in this joint proxy statement/prospectus. The receipt of financing by Disney and New Disney is not a condition to completion of the mergers and, accordingly, Disney and New Disney will be required to complete the mergers (assuming that all of the conditions to its obligations under the combination merger agreement are satisfied) whether or not debt financing is available at all or on acceptable terms.

 

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The fairness opinions obtained by the 21CF board and the Disney board from their respective financial advisors do not and will not reflect changes in circumstances between signing the combination merger agreement and completion of the transactions and such opinions will not be updated after the tax adjustment amount (if any) is calculated.

On June 18, 2018, each of Guggenheim Securities and J.P. Morgan delivered separate opinions to the Disney board that, as of June 18, 2018, and based upon and subject to the qualifications, limitations and assumptions set forth in their respective opinions, the aggregate 21CF merger consideration to be paid by New Disney was fair, from a financial point of view, to Disney. In addition, on June 20, 2018, Goldman Sachs and Centerview delivered separate opinions to the 21CF board to the effect that, as of June 20, 2018, and based upon and subject to the factors and assumptions set forth in its written opinion, the 21CF merger consideration to be paid to the 21CF stockholders (other than certain excluded stockholders) in the aggregate pursuant to the combination merger agreement was fair from a financial point of view to such stockholders (other than Disney and its affiliates), taken in the aggregate.

Neither the 21CF board nor the Disney board have obtained updated opinions as of the date of this document from their respective financial advisors and the opinions received prior to the signing of the combination merger agreement speak only as of the date of issuance. No opinion is expected to be updated at any future date, including once the distribution has been effected, the final estimate of the transaction tax has been made and the tax adjustment amount (if any) has been calculated. Consequently, the projections and assumptions provided by 21CF and Disney to their respective financial advisors for their use in performing their respective financial analyses and their respective opinions do not take into account events occurring or information that has or will become available after June 18, 2018 or June 20, 2018, as applicable, including, among other things, the outcome of the distribution, the final estimate of the transaction tax, any changes to the operations and prospects of 21CF or Disney, regulatory or legal changes, general market and economic conditions, the Comcast Sky offer and Sky’s subsequent withdrawal of its previously announced recommendation that unaffiliated Sky shareholders vote in favor of the Sky acquisition and other factors that may be beyond the control of 21CF and Disney. Such subsequent events or information may have altered the value of 21CF or Disney or the prices of shares of 21CF common stock or Disney common stock as of the date of this joint proxy statement/prospectus, or may alter such values and prices by the time the transactions are completed.

Neither the Disney board nor the 21CF board has requested, or intends to request, the delivery of an additional opinion taking into account changes in circumstances between signing the combination merger agreement and the completion of the transactions. The opinions of Goldman Sachs, Centerview, Guggenheim Securities and J.P. Morgan are attached as Annex F, G, H and I, respectively, to this joint proxy statement/prospectus. For a description of the opinions that 21CF and Disney received from their respective financial advisors, see the sections entitled “The Transactions—Opinions of 21CF’s Financial Advisors” beginning on page [●] of this joint proxy statement/prospectus and “The Transactions—Opinions of Disney’s Financial Advisors” beginning on pages [●] and [●] of this joint proxy statement/prospectus, respectively. As a result, the 21CF board and the Disney board have not had, and will not have, the benefit of fairness opinions that consider developments occurring after June 20, 2018, or June 18, 2018, respectively.

21CF’s and Disney’s respective bylaws have been amended to, and New Disney’s bylaws will, designate the Court of Chancery of the State of Delaware (or in some cases, other state or federal courts in Delaware) as the sole and exclusive forum for certain disputes between each of 21CF, Disney and New Disney and their respective stockholders, which could limit the ability of 21CF stockholders, Disney stockholders or New Disney stockholders to choose the judicial forum for certain proceedings relating to 21CF, Disney, or New Disney, as applicable.

21CF’s and Disney’s respective bylaws provide, and New Disney’s bylaws will provide, that, unless 21CF, Disney or New Disney, as applicable, consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject

 

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matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for:

 

    any derivative action brought on behalf of 21CF, Disney or New Disney, as applicable;

 

    any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or stockholder of 21CF, Disney or New Disney as applicable, to 21CF, Disney or New Disney, as applicable, or their respective stockholders;

 

    any action asserting a claim arising pursuant to, or seeking to enforce any right, obligation or remedy under, the DGCL;

 

    any action as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and

 

    any action asserting a claim governed by the internal affairs doctrine.

This forum selection bylaw may limit the ability of 21CF stockholders, Disney stockholders or New Disney stockholders to bring a claim in a judicial forum that it finds favorable or cost-efficient for disputes with 21CF, Disney or New Disney, as applicable, or any of their respective directors, officers or other employees, which may discourage lawsuits with respect to such claims.

21CF, Disney and New Disney may not achieve the intended benefits of having a forum selection bylaw if it is found to be unenforceable.

The 21CF bylaws and the Disney bylaws include, and the New Disney bylaws will include, a forum selection bylaw as described above. However, the enforceability of similar forum selection bylaws in other companies’ bylaws or similar governing documents has been challenged in legal proceedings, and it is possible that in connection with any action a court could find the forum selection bylaw contained in the 21CF bylaws, the Disney bylaws or the New Disney bylaws to be inapplicable or unenforceable in such action. In September 2014, the Delaware Court of Chancery upheld the statutory and contractual validity of exclusive forum-selection bylaw provisions, and in 2015, the Delaware legislature adopted Section 115 of the DGCL which specifically permits Delaware corporations to adopt forum-selection charter or bylaw provisions that select Delaware as an exclusive forum to address internal corporate claims. However, the Delaware Court of Chancery emphasized that such provisions may not be enforceable under circumstances where they are found to operate in an unreasonable or unlawful manner or in a manner inconsistent with directors’ fiduciary duties. Also, it is uncertain whether non-Delaware courts consistently will enforce such exclusive forum-selection bylaw provisions though multiple non-Delaware courts have enforced similar provisions in the by-laws of Delaware corporations. If a court were to find the forum selection bylaw contained in the 21CF bylaws, the Disney bylaws or the New Disney bylaws to be inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, 21CF, Disney or New Disney, as applicable, may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect the business, financial conditions and results of operations of 21CF, Disney and New Disney.

 

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RISK FACTORS RELATING TO NEW DISNEY FOLLOWING THE TRANSACTIONS

The transactions may not be accretive, and may be dilutive, to New Disney’s earnings per share, which may negatively affect the market price of New Disney common stock.

Disney currently expects that the transactions will be accretive to New Disney’s earnings per share, excluding the impact of purchase accounting, for the second fiscal year after closing. This expectation, however, is based on preliminary estimates that may materially change. In addition, New Disney could fail to realize all of the benefits anticipated in the transactions or experience delays or inefficiencies in realizing such benefits. Such factors could, combined with the issuance of shares of New Disney stock as consideration in the 21CF merger, which may be subject to the tax adjustment amount, which would be based on the final estimate of the transaction tax (for a more complete description, see the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus), result in the transactions being dilutive to New Disney’s earnings per share, which could negatively affect the market price of New Disney’s common stock.

Although we expect that the transactions will result in synergies and other benefits to New Disney, we may not realize those benefits because of difficulties related to integration, the achievement of synergies, and other challenges.

Disney and 21CF have operated and, until the consummation of the transactions, will continue to operate, independently, and there can be no assurances that our businesses can be combined in a manner that allows for the achievement of substantial benefits. If New Disney is not able to successfully integrate 21CF’s businesses, the anticipated benefits and cost savings of the transactions may not be realized fully or may take longer than expected to be realized. Further, it is possible that there could be loss of key Disney, New Disney or 21CF employees, loss of customers, disruption of their respective ongoing businesses or unexpected issues, higher than expected costs and an overall post-completion process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in combining the operations of Disney and 21CF in order to realize the anticipated benefits of the transactions so the combined company performs as the parties hope:

 

    combining the corporate functions of the two companies;

 

    combining the businesses of Disney and 21CF in a manner that permits New Disney to achieve the synergies anticipated to result from the transactions, the failure of which would result in the anticipated benefits of the transactions not being realized in the time frame currently anticipated or at all;

 

    maintaining existing relations and goodwill with governmental entities, customers, suppliers, distributors, licensors, creditors, lessors, employees and business associates and others (including material content providers, studios, authors, producers, directors, actors, performers, guilds, announcers and advertisers);

 

    determining whether and how to address possible differences in corporate cultures and management philosophies;

 

    integrating the administrative and information technology infrastructure of the two companies;

 

    developing products and technology that allow value to be unlocked in the future; and

 

    effecting potential actions that may be required in connection with obtaining regulatory approvals.

In addition, at times the attention of certain members of management and resources may be focused on consummation of the transactions and integration planning of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt Disney’s ongoing business and the business of the combined company.

 

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Consummation of the transactions will increase New Disney’s exposure to the risks of operating internationally.

Disney is, and New Disney will be, a diversified entertainment company that offers entertainment, travel and consumer products worldwide. Although many of Disney’s businesses increasingly depend on acceptance of Disney’s offerings and products by consumers outside of the U.S., the combination with 21CF will increase the importance of international operations to New Disney’s future operations, growth and prospects. The risks of operating internationally that New Disney faces may therefore be exacerbated upon completion of the transactions.

Disney’s consolidated indebtedness will increase substantially following completion of the transactions. This increased level of indebtedness and the incurrence of additional debt to pay a portion of the 21CF merger consideration will significantly increase New Disney’s interest expense, financial leverage and debt service requirements, each of which could adversely affect New Disney, including by decreasing its business flexibility.

Disney’s consolidated indebtedness as of March 31, 2018 was approximately $24.7 billion. Upon completion of the transactions, Disney will assume an estimated fair value of approximately $17.1 billion of additional outstanding net debt of 21CF if the Sky acquisition is not completed or an estimated fair value of $44.5 billion of additional outstanding net debt of 21CF if the Sky acquisition is completed. Disney and New Disney expect to fund the 21CF cash consideration (approximately $35.7 billion) upon completion of the mergers through the issuance of senior unsecured notes and/or commercial paper. Such contemplated financing is backstopped by a 364-day unsecured bridge term loan facility to be provided by a five bank syndicate totaling $35.7 billion. See the section entitled “Description of Financing” beginning on page [●] of this joint proxy statement/prospectus. Following the completion of this financing transaction, it is expected that the combined company will have approximately $108.3 billion of short and long-term debt and that debt service obligations will be approximately $3.2 million per year.

The increased indebtedness could have the effect of, among other things, reducing New Disney’s flexibility to respond to changing business and economic conditions. In addition, the amount of cash required to pay interest on New Disney’s increased indebtedness levels will increase following completion of the transactions, and thus the demands on New Disney’s cash resources will be greater than prior to the transactions. The increased levels of indebtedness following completion of the transactions could also reduce funds available for capital expenditures, share repurchases and dividends, and other activities and may create competitive disadvantages for New Disney relative to other companies with lower debt levels. New Disney’s funds on hand will be further constrained by the issuance of shares of New Disney common stock in the acquisition, because of dividend payments on New Disney common stock, which, as of the date of this filing, were $0.84 per share of Disney common stock on a semi-annual basis.

Following consummation of the mergers, the corporate or debt-specific credit rating of New Disney or any of its subsidiaries could be downgraded, which may increase New Disney’s borrowing costs or give rise to a need to refinance existing indebtedness.

New Disney will, by reason of the debt incurred to finance the 21CF cash consideration, have considerably higher aggregate levels of indebtedness than Disney and 21CF currently have in the aggregate, and there can be no assurance that the corporate or debt-specific credit ratings of New Disney or any of its subsidiaries will not be subject to a downgrade. If a ratings downgrade occurs, New Disney may need to refinance existing debt or be subject to higher borrowing costs and more restrictive covenants when it incurs new debt in the future, which could reduce profitability and diminish operational flexibility.

New Disney cannot assure you that it will be able to pay dividends at the current rate at which Disney pays dividends.

Disney plans for New Disney to continue Disney’s current dividend practices following the transaction. However, based on the number of issued and outstanding shares of 21CF common stock as of May 29, 2018, and

 

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assuming an average Disney stock price of $103.926, which was the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018, and assuming there would be no tax adjustment amount, New Disney would be required to issue approximately 343 million shares of New Disney common stock in connection with the 21CF merger. For a description of the tax adjustment amount, please see the section of this joint proxy statement/prospectus entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●]. Continuing Disney’s current dividend practices following the transaction will require additional cash to pay such dividends, which New Disney may not have. For this and other reasons generally affecting the ability to pay dividends, you should be aware that New Disney stockholders may not receive the same dividends following the transaction.

Stockholders also should be aware that they have no contractual or other legal right to dividends that have not been declared.

After the transactions, former 21CF stockholders and current Disney stockholders will have a reduced ownership and voting interest and will exercise less influence over management of the combined company.

Based on the number of shares of 21CF common stock outstanding as of May 29, 2018, the number of shares of Disney common stock outstanding as of May 29, 2018, and based on the minimum and maximum potential exchange ratios of 0.3324 and 0.4063, respectively, and assuming no tax adjustment amount, it is expected that, immediately after completion of the transactions, former 21CF stockholders will own approximately 17-20% of the outstanding shares of New Disney common stock. For a description of the tax adjustment amount, please see the section of this joint proxy statement/prospectus entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●]. As a result of the issuance of New Disney common stock to 21CF stockholders, current Disney stockholders as a group will own approximately 80-83% of New Disney common stock outstanding after the completion of the transactions. Consequently, current Disney stockholders and former 21CF stockholders will have less influence over the management and policies of the combined company than they currently have over the management and policies of Disney and 21CF, respectively. Because of the tax adjustment amount, and because the number of Disney shares to be issued in the 21CF merger will depend on the average Disney stock price, the exact split in ownership of shares of New Disney common stock between current Disney stockholders and former 21CF stockholders, and, as a result, the dilutive impact of the transactions, is not currently known and will not be known at the time of either the 21CF special meeting or the Disney special meeting. Neither 21CF nor Disney will resolicit votes from their respective stockholders once the distribution has been effected, the final estimate of the transaction tax has been made and the tax adjustment amount (if any) has been calculated.

If the hook stock shares are not eliminated prior to the completion of the 21CF merger, they could subject New Disney to increased taxes and the possibility of additional taxes may increase the cost and complexity of future transactions.

As described below under “The Combination Merger Agreement—Tax Matters—Hook Stock,” 21CF will cooperate with Disney and use its reasonable best efforts to consider potential transactions to eliminate all or a portion of the hook stock shares. In connection with these efforts, 21CF has requested a ruling from the IRS and, if a decision is made to proceed with a transaction to eliminate all or a portion of the hook stock shares, would request Australian private rulings that would facilitate transactions to eliminate the hook stock shares (all such rulings we refer to collectively as the elimination rulings). There can be no assurances that a decision will be made to proceed with a transaction to eliminate all or a portion of the hook stock shares, and if such a decision is made, there can be no assurances as to when any Australian private rulings would be requested and whether or when any such rulings or any IRS rulings would be obtained.

Any hook stock shares that have not been eliminated at the time of the 21CF merger will remain outstanding and will be unaffected by the 21CF merger. In connection with the execution of the combination merger agreement, Disney received a signing date tax opinion to the effect that, on the basis of the facts, representations

 

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and assumptions set forth in such opinion, the 21CF charter amendment, the distribution and the mergers should not result in any hook stock tax under Australian tax law (for more information, see the section entitled “The Combination Merger Agreement—Representations and Warranties”). The failure of any of the representations or assumptions on which the opinion is based to be true, correct and complete in all material respects could adversely affect the conclusions reached in the signing date tax opinion. Moreover, the signing date tax opinion does not address whether any transactions undertaken after the 21CF merger could result in any hook stock tax. Following the 21CF merger, holders of the hook stock shares may hold their 21CF shares with a tax basis substantially below the shares’ fair market value. If these holders were to dispose of these shares, be treated for tax purposes as disposing of these shares, or otherwise be required to recognize this built-in gain under U.S. or Australian tax law, they, 21CF or New Disney could be liable for a substantial amount of tax. The possibility of incurring this tax liability may increase the cost and complexity of future internal restructuring transactions.

The Panel on Takeovers and Mergers of the United Kingdom, which we refer to as the U.K. Takeover Panel has ruled that, unless the Sky acquisition has completed or a third party has acquired more than 50% of the ordinary shares in Sky, in each case, prior to the completion of the transactions, Disney will be obliged to make a mandatory offer for all the ordinary shares in Sky not already owned by 21CF in cash.

21CF currently has an approximately 39% interest in Sky. On April 12, 2018, the U.K. Takeover Panel ruled that, as a result of Disney’s offer for 21CF announced on December 14, 2017, unless the Sky acquisition has completed or a third party has acquired more than 50% of the ordinary shares in Sky, in each case prior to the completion of the transactions, Disney will be obliged to make a mandatory offer for all the ordinary shares in Sky not already owned by 21CF in accordance with Note 8 of Rule 9.1 of the Takeover Code as promulgated by the U.K. Takeover Panel, which we refer to as the U.K. Takeover Code, within 28 days of completion of the transactions. The U.K. Takeover Panel has previously ruled that such mandatory offer would be required to be at a price of £10.75 per share. The U.K. Takeover Panel has not made any revised ruling on price at this time.

Completion of the Sky acquisition is not a condition to either party’s obligation to consummate the transactions.

The Sky acquisition is subject to a number of uncertainties and may not be completed on its current terms, or at all.

The Sky acquisition remains subject to approval by the UK Secretary of State for Digital, Culture, Media and Sport, whom we refer to as the Secretary of State, and the requisite approval of Sky shareholders unaffiliated with 21CF, as well as to certain other customary closing conditions. In connection with the approval sought from the UK Secretary of State, 21CF has undertaken to the Secretary of State to take certain actions in respect of Sky News. On June 19, 2018, the Secretary of State stated that the undertakings offered by 21CF and Disney were in a form he proposes to accept. However, these proposed final undertakings are subject to a period of public consultation that will end on July 4, 2018, following which the Secretary of State is expected to make a final decision. If the Secretary of State ultimately determines not to accept the revised undertakings, 21CF will be unable to complete the Sky acquisition.

In addition, on April 25, 2018, Comcast announced a pre-conditional cash offer for the fully diluted share capital of Sky at an offer price of £12.50 per Sky share. Following the Comcast Sky offer, the Sky independent committee withdrew its previously announced recommendation that unaffiliated Sky shareholders vote in favor of the Sky acquisition and 21CF received from Sky a written notice of termination of the Sky cooperation agreement. The existence of the Comcast Sky offer may make it more difficult for 21CF to obtain the requisite approval of Sky shareholders unaffiliated for 21CF for the Sky acquisition.

In the event that 21CF is unable to complete the Sky acquisition, 21CF’s and, following consummation of the transactions, New Disney’s business, financial condition and results of operations could be adversely affected.

 

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OTHER RISKS

Additional Risks Relating to Disney and 21CF

Disney and 21CF are, and following completion of the transactions New Disney will be, subject to the risks described in (i) Part II, Item 1A, “Risk Factors” in Disney’s Quarterly Report on Form 10-Q for the quarterly period ended December 30, 2017, filed on February 6, 2018, (ii) Part I, Item 1A, “Risk Factors” in Disney’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017, filed on November 22, 2017, (iii) Part II, Item 1A, “Risk Factors” in 21CF’s Quarterly Reports on Form 10-Q for the quarterly period ended September 30, 2017, filed on November 9, 2017, the quarterly period ended December 31, 2017, filed on February 8, 2018 and the quarterly period ended March 31, 2018, filed on May 10, 2018 and (iv) Part I, Item 1A, “Risk Factors” in 21CF’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, filed on August 14, 2017. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

INFORMATION ABOUT THE 21CF SPECIAL MEETING

Time, Place and Purpose of the 21CF Special Meeting

This joint proxy statement/prospectus is being furnished to 21CF stockholders as part of the solicitation of proxies by the 21CF board, for use at the 21CF special meeting to be held on [●], at [●] (Eastern Time), at [●] or at any postponement or adjournment thereof.

At the 21CF special meeting, 21CF stockholders, voting together as a single class, will be asked to consider and vote on (i) the combination merger proposal and (ii) the distribution merger proposal.

At the 21CF special meeting, holders of outstanding shares of 21CF class B common stock, will be asked to consider and vote on (i) the 21CF charter amendment proposal, (ii) the 21CF adjournment proposal, and (iii) the compensation proposal.

21CF stockholders must adopt the combination merger agreement and the distribution merger agreement and approve the 21CF charter amendment in order for the transactions to occur. If 21CF stockholders fail to adopt the combination merger agreement or the distribution merger agreement or fail to approve the 21CF charter amendment, none of the transactions will occur. A copy of the combination merger agreement is attached as Annex A to this joint proxy statement/prospectus. A copy of the distribution merger agreement is attached as Annex B to this joint proxy statement/prospectus. A copy of the 21CF charter amendment is attached as Annex E. You are encouraged to read the combination merger agreement, the distribution merger agreement and the 21CF charter amendment carefully and in their entirety.

Record Date and Quorum

21CF has set the close of business on May 29, 2018 as the record date for the 21CF special meeting, and only 21CF stockholders of record on the record date are entitled to vote at the 21CF special meeting. You are entitled to receive notice of, and to vote at, the 21CF special meeting if you are a 21CF stockholder of record as of the close of business on the record date. On the record date, there were 798,520,953 shares of 21CF class B common stock outstanding held by approximately 6,504 holders of record and 1,054,032,541 shares of 21CF class A common stock outstanding held by approximately 28,977 holders of record.

Each holder of shares of 21CF class B common stock held as of the record date is entitled to one vote per share of 21CF class B common stock on all matters to be presented at the 21CF special meeting. Each holder of shares of 21CF class A common stock held as of the record date is entitled to one vote per share of 21CF class A common stock on the combination merger proposal and the distribution merger proposal but is not entitled to vote on any other proposal on account of its shares of 21CF class A common stock.

 

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The presence, in person or represented by proxy, of a majority in voting power of all outstanding shares of 21CF common stock entitled to vote at the 21CF special meeting shall constitute a quorum for purposes of the combination merger proposal and the distribution merger proposal. The presence, in person or represented by proxy, of a majority in voting power of all outstanding shares of 21CF class B common stock entitled to vote at the 21CF special meeting shall constitute a quorum for purposes of the 21CF charter amendment proposal, the 21CF adjournment proposal and the compensation proposal. Abstentions are considered for purposes of establishing a quorum. A quorum is necessary to transact business at the 21CF special meeting.

Additionally, the 21CF bylaws, and the DGCL, provide that if a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum shall be present.

Attendance

As described below, if your shares of 21CF common stock are registered directly in your name with 21CF’s transfer agent, Computershare Trust Company, N.A., you are considered the stockholder of record with respect to such shares of 21CF common stock and you have the right to attend the 21CF special meeting and vote in person, subject to compliance with the procedures described below. If your shares of 21CF common stock are held in a brokerage account or by a bank or other nominee, you are the beneficial owner of such shares. As such, in order to attend the 21CF special meeting and vote in person, you must obtain and present at the time of admission a properly executed proxy from the stockholder of record giving you the right to attend and vote the shares of 21CF common stock.

If you plan to attend the meeting, you must be a stockholder on the record date of May 29, 2018 and obtain an admission ticket in advance. Tickets will be available to registered and beneficial owners. You can print your own tickets and you must bring them to the meeting to gain access. Tickets can be printed by accessing Shareholder Meeting Registration at www.ProxyVote.com and following the instructions provided (you will need the 16 digit number included on your proxy card or voter instruction form). If you are unable to print your tickets, please contact the Corporate Secretary at 1-212-852-7000. Requests for admission tickets will be processed in the order in which they are received and must be submitted no later than 11:59 p.m. (Eastern Time) on [●], 2018. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. If you received your special meeting materials electronically and wish to attend the meeting, please follow the instructions provided for attendance. If you are attending the 21CF special meeting in person, you will be required to present valid, government-issued photo identification, such as a driver’s license or passport, and an admission ticket to be admitted to the 21CF special meeting. Large bags, backpacks, suitcases, briefcases, cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting.

Seating at the 21CF special meeting will begin at [●] (Eastern Time). Prior to entering the 21CF special meeting, all bags will be subject to search and all persons may be subject to a metal detector and/or hand wand search. The security procedures may require additional time, so please plan accordingly. 21CF suggests arriving at least 45 minutes early to the 21CF special meeting. If you do not provide an admission ticket and government-issued photo identification or do not comply with the other registration and security procedures described above, you will not be admitted to the 21CF special meeting. Registration will close ten minutes prior to the meeting. 21CF reserves the right to remove persons from the 21CF special meeting who disrupt the 21CF special meeting or who do not comply with the rules and procedures for the conduct of the 21CF special meeting.

If you require any special accommodations at the 21CF special meeting due to a disability, please contact the Corporate Secretary at (212) 852-7000 or send an email to SpecialMeeting@21cf.com and identify your specific need no later than [●], 2018.

 

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Vote Required

The combination merger proposal and distribution merger proposal require the affirmative vote of the holders of a majority of the outstanding shares of 21CF class A common stock and 21CF class B common stock, voting together as a single class. For adoption of the combination merger agreement and the combination distribution merger agreement, you may vote “FOR”, “AGAINST” or “ABSTAIN”. Votes to abstain will not be counted as votes cast in favor of the adoption of the combination merger agreement or the distribution merger agreement, but will count for the purpose of determining whether a quorum is present. If you fail to submit a valid proxy or to vote in person at the 21CF special meeting or if you vote to abstain in connection with the combination merger proposal or the distribution merger proposal, it will have the same effect as a vote “AGAINST” adoption of the combination merger agreement or the distribution merger agreement, as applicable.

If your shares of 21CF common stock are registered directly in your name with 21CF’s transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares of 21CF common stock, the stockholder of record. If you are a stockholder of record, this joint proxy statement/prospectus and the enclosed proxy card have been sent directly to you by 21CF.

If your shares of 21CF common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of 21CF common stock held in “street name.” In that case, this joint proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of 21CF common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.

Under the rules of Nasdaq, banks, brokerage firms or other nominees who hold shares in “street name” for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the adoption of the combination merger agreement, the adoption of the distribution merger agreement, approval of the 21CF charter amendment, adjournment of the 21CF special meeting and approval, by non-binding, advisory vote, of the transactions-related executive compensation. As a result, absent specific instructions from the beneficial owner of such shares of 21CF common stock, banks, brokerage firms and other nominees are not empowered to vote those shares of 21CF common stock on non-routine matters.

The 21CF charter amendment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of 21CF class B common stock entitled to vote thereon. For purposes of the 21CF charter amendment proposal, you may vote “FOR”, “AGAINST” or “ABSTAIN”. For purposes of the votes on the 21CF charter amendment proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the proposal, or if you vote to abstain on the proposal, this will have the effect of a vote “AGAINST” the 21CF charter amendment proposal. Votes to abstain will not be counted as votes cast in favor of the 21CF charter amendment proposal, but will count for the purpose of determining whether a quorum is present. If you fail to submit a valid proxy or to vote in person at the 21CF special meeting or if you vote to abstain, it will have the same effect as a vote “AGAINST” the 21CF charter amendment proposal.

The 21CF adjournment proposal requires affirmative vote of a majority of votes cast thereon by the holders of shares of 21CF class B common stock entitled to vote thereon. For purposes of the 21CF adjournment proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the 21CF adjournment proposal, or if you have given a proxy and abstained on the 21CF adjournment proposal, or if you fail to submit a proxy or to vote in person at the 21CF special meeting, as applicable, the shares of 21CF class B common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have an effect on, the vote to adjourn the 21CF special meeting.

 

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The compensation proposal requires the affirmative vote of a majority of votes cast thereon by the holders of shares of 21CF class B common stock entitled to vote thereon. For purposes of the compensation proposal, if your shares of 21CF class B common stock are present at the 21CF special meeting but are not voted on the compensation proposal, or if you have given a proxy and abstained on the compensation proposal, or if you fail to submit a proxy or to vote in person at the 21CF special meeting, as applicable, the shares of 21CF class B common stock held by you or your bank, brokerage firm or other nominee will not be counted in respect of, and will not have an effect on, the proposal to approve, by non-binding, advisory vote, the transactions-related executive compensation.

As of the 21CF record date, the Murdoch Family Trust and the directors and executive officers of 21CF beneficially owned and were entitled to vote, in the aggregate, 12,188,683 shares of 21CF class A common stock, representing approximately 1% of the outstanding shares of 21CF class A common stock as of the close of business on the 21CF record date (of which 57,000, or less than 1%, were beneficially owned by the Murdoch Family Trust), and 310,913,109 shares of 21CF class B common stock, representing approximately 38.9% of the outstanding shares of 21CF class B common stock as of the close of business on the 21CF record date (of which 306,623,480, or approximately 38.4%, were beneficially owned by the Murdoch Family Trust). As of May 29, 2018, the directors and executive officers of Disney beneficially owned approximately 1,949 shares of 21CF class A common stock, representing less than 1% of the shares of 21CF class A common stock then outstanding and entitled to vote, and beneficially owned approximately 85 shares of 21CF class B common stock, representing less than 1% of the shares of 21CF class B common stock then outstanding and entitled to vote.

Proxies and Revocations

If you are a stockholder of record, you may have your shares of 21CF common stock voted on matters presented at the 21CF special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by 11:59 p.m. (Eastern Time) on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the 21CF special meeting and cast your vote there.

If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your 21CF common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the 21CF special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the 21CF special meeting.

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the internet or by telephone. If you choose to submit a proxy by mailing a proxy card, your proxy card should be mailed in the accompanying prepaid reply envelope, and your proxy card must be filed with the Corporate Secretary of 21CF by the time the 21CF special meeting begins. Please do not send in your share certificates with your proxy card. When the 21CF merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the 21CF merger consideration in exchange for your share certificates.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, will vote your shares of 21CF common stock in the

 

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way that you indicate. When completing the internet or telephone processes or the proxy card, you may specify whether your shares of 21CF common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the 21CF special meeting to which you are entitled to vote.

If you properly sign your proxy card but do not mark the boxes showing how your shares of 21CF common stock should be voted on a matter, the shares of 21CF common stock represented by your properly signed proxy will be voted “FOR” each of the proposals upon which you are entitled to vote.

You have the right to revoke a proxy, whether delivered over the internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the 21CF special meeting and voting in person, or by giving written notice of revocation to 21CF prior to the time the 21CF special meeting begins. Written notice of revocation should be mailed to: 21st Century Fox, Attention: Corporate Secretary, 1211 Avenue of the Americas, New York, New York 10036. If you have instructed a bank, brokerage firm or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, brokerage firm or other nominee to change those instructions.

If you have any questions or need assistance voting your shares, please contact Okapi Partners LLC, 21CF’s proxy solicitor, 1212 Avenue of the Americas, 24th floor, New York, New York 10036 or by email at 21CFinfo@okapipartners.com. Banks and brokers call collect: (212) 297-0720; stockholders and all others call toll free: (877) 274-8654.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF 21CF COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE 21CF SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. 21CF STOCKHOLDERS WHO ATTEND THE 21CF SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Adjournments and Postponements

Although it is not currently expected, the 21CF special meeting may be adjourned on one or more occasions for the purpose of soliciting additional proxies if there are insufficient votes at the time of the 21CF special meeting to adopt the combination merger agreement or the distribution merger agreement, to approve the 21CF charter amendment or if a quorum necessary to approve any such matters is not present at the 21CF special meeting. However, the combination merger agreement provides that 21CF may not adjourn the 21CF special meeting for more than an aggregate of 15 days for the purpose of soliciting additional proxies or obtaining a quorum. Any adjournment of the 21CF special meeting for the purpose of soliciting additional proxies will allow 21CF stockholders who have already sent in their proxies to revoke them at any time prior to their use at the 21CF special meeting as adjourned.

21CF may also postpone or adjourn the 21CF special meeting to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that 21CF has determined, after consultation with outside legal counsel, is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by 21CF stockholders prior to the 21CF special meeting.

An adjournment generally may be made with the affirmative vote of the holders of a majority of the shares of 21CF class B common stock present in person or represented by proxy and entitled to vote thereon.

 

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Solicitation of Proxies; Payment of Solicitation Expenses

21CF has engaged Okapi to assist in the solicitation of proxies for the 21CF special meeting. 21CF estimates that it will pay Okapi a fee of approximately $25,000. 21CF has agreed to reimburse Okapi for certain out-of-pocket fees and expenses and also will indemnify Okapi against certain losses, claims, damages, liabilities or expenses. 21CF also may reimburse banks, brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of 21CF common stock. 21CF’s directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the internet or in person. They will not be paid any additional amounts for soliciting proxies.

Appraisal Rights of 21CF Stockholders

Pursuant to Section 262 of the DGCL, 21CF stockholders who do not vote in favor of the adoption of the combination merger agreement and who comply with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of such shares by the Delaware Court of Chancery and to receive payment in cash of the fair value of those shares. It is possible that the fair value as determined by the Delaware Court of Chancery may be more or less than, or the same as, the 21CF merger consideration.

21CF stockholders who wish to preserve their appraisal rights must make a demand for appraisal prior to the time the 21CF stockholder vote is taken on the adoption of the combination merger agreement. In addition to submitting a demand for appraisal, such 21CF stockholders must continuously hold such shares through the 21CF effective time, must not vote in favor of the adoption of the combination merger agreement, must not surrender their shares in exchange for the 21CF merger consideration, and must otherwise follow the procedures prescribed by Section 262 of the DGCL.

You are encouraged to read Section 262 of the DGCL carefully and in their entirety. Due to the complexity of the procedures for exercising your appraisal rights, 21CF stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with these provisions will result in the loss of appraisal rights. See the section entitled “Appraisal Rights of 21CF Stockholders” beginning on page [●] of this joint proxy statement/prospectus for additional information and the text of Section 262 of the DGCL reproduced in its entirety as Annex J to this proxy statement/prospectus.

Questions and Additional Information

If you have additional questions about the transactions, need assistance in submitting your proxy or voting your shares of 21CF common stock or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, please contact Okapi Partners LLC, 21CF’s proxy solicitor, 1212 Avenue of the Americas, 24th floor, New York, New York 10036 or by email at 21CFinfo@okapipartners.com. Banks and brokers call collect: (212) 297-0720; stockholders and all others call toll free: (877) 274-8654.

 

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INFORMATION ABOUT THE DISNEY SPECIAL MEETING

Time, Place and Purpose of the Disney Special Meeting

This joint proxy statement/prospectus is being furnished to Disney stockholders as part of the solicitation of proxies by the Disney board for use at the special meeting to be held on [●], at [●] local time, at [●], or at any postponement or adjournment thereof.

At the Disney special meeting, Disney stockholders will be asked to consider and vote on the share issuance proposal and the Disney adjournment proposal.

Disney stockholders must approve the share issuance proposal in order for the transactions to occur. If Disney stockholders fail to approve the share issuance proposal, the transactions will not occur.

Record Date and Quorum

Disney has set the close of business on May 29, 2018 as the record date for the Disney special meeting, which we refer to as the Disney record date, and only holders of record of Disney common stock on the Disney record date are entitled to vote at the Disney special meeting. You are entitled to receive notice of, and to vote at, the Disney special meeting if you are a stockholder of record of shares of Disney common stock as of the close of business on the Disney record date. On the Disney record date, there were [●] shares of Disney common stock outstanding and entitled to vote. You will have one vote on all matters properly coming before the Disney special meeting for each share of Disney common stock that you owned on the Disney record date.

The presence, in person or represented by proxy, of a majority of the votes entitled to be cast by holders of Disney common stock entitled to vote at the Disney special meeting constitutes a quorum for the purposes of the Disney special meeting. Abstentions are considered for purposes of establishing a quorum. A quorum is necessary to transact business at the Disney special meeting.

If a quorum shall fail to attend any meeting, a minority of the stockholders entitled to vote thereat, present in person or represented by proxy, may adjourn the meeting from time to time, without notice other than by announcement at the meeting, until a quorum is present or represented, unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting.

Attendance

Only Disney stockholders of record as of the close of business on the Disney record date, their duly authorized proxy holders, beneficial owners with proof of ownership and guests of Disney may attend the Disney special meeting. If you plan to attend the meeting, you must be a stockholder on the record date of May 29, 2018 and obtain an admission ticket in advance. Tickets will be available to registered and beneficial owners and (if permitted by Disney) up to one guest accompanying each registered or beneficial owner. You can print your own tickets and you must bring them to the meeting to gain access. Tickets can be printed by accessing Shareholder Meeting Registration at www.ProxyVote.com/Disney and following the instructions provided (you will need the 16 digit number included on your proxy card or voter instruction form). If you are unable to print your tickets, please contact Broadridge at 1-855-449-0994. Requests for admission tickets will be processed in the order in which they are received and must be requested no later than 11:59 p.m. (Eastern Time) on [●], 2018. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. If you are the representative of a corporate or institutional stockholder, you must present proof that you are the representative of such stockholder. Any person attending the Disney special meeting in person will be required to present valid, government-issued photo identification, such as a driver’s license or passport, and an admission ticket to be admitted to the Disney special meeting. Large bags, backpacks, suitcases, briefcases, cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at

 

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the meeting. In addition, other measures may be employed to enhance the security of persons attending the Disney special meeting. You will be required to enter through a security checkpoint before being granted access to the meeting. These procedures may require additional time, so please plan your arrival time accordingly. To avoid disruption, admission may be limited once the Disney special meeting begins.

Vote Required

Approval of the share issuance proposal and the Disney adjournment proposal require the affirmative vote of the holders of a majority of the shares of Disney common stock present in person or represented by proxy at the Disney special meeting and entitled to vote at the Disney special meeting. For purposes of the share issuance proposal and the Disney adjournment proposal, if your shares of Disney common stock are present at the Disney special meeting but are not voted on such proposal, or if you vote to abstain on such proposal, this will have the effect of a vote “AGAINST” the share issuance proposal and the Disney adjournment proposal, as applicable. If you fail to submit a proxy or to attend the Disney special meeting or if your shares of Disney common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Disney common stock, your shares of Disney common stock will not be voted, but this will not have an effect on the vote on the share issuance proposal or the Disney adjournment proposal.

If your shares of Disney common stock are registered directly in your name with the transfer agent of Disney, Broadridge Financial Solutions, Inc., you are considered, with respect to those shares of Disney common stock, the stockholder of record. If you are a stockholder of record, this joint proxy statement/prospectus and the enclosed proxy card have been sent directly to you by Disney.

If your shares of Disney common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of Disney common stock held in “street name.” In that case, this joint proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of Disney common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares of Disney common stock by following their instructions for voting.

Under the rules of the NYSE, banks, brokerage firms or other nominees who hold shares in “street name” for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the approval of the share issuance proposal and the Disney adjournment proposal. As a result, absent specific instructions from the beneficial owner of such shares of Disney common stock, banks, brokerage firms and other nominees are not empowered to vote those shares of Disney common stock on non-routine matters.

If you participate in the Disney Savings and Investment Plan or the Disney Hourly Savings and Investment Plan, you may give voting instructions as to the number of shares of Disney common stock you hold in the plan as of the Disney record date. You may provide voting instructions to Fidelity Management Trust Company by voting online or by completing and returning a proxy card if you received one. If you are a record holder of shares other than through these plans and you vote electronically, voting instructions you give with respect to those shares will be applied to Disney stock credited to your accounts in a savings and investment plan unless you request a separate control number with respect to each account. To receive separate control numbers, please call 1-855-449-0994. The trustee will vote your shares in accordance with your duly executed instructions received by [●], 2018. If you do not send instructions, an independent fiduciary has been selected to determine how to vote all shares for which the trustee does not receive valid and timely instructions from participants. You may revoke previously given voting instructions by [●], 2018, by either revising your instructions online or by submitting to the trustee either a written notice of revocation or a properly completed and signed proxy card bearing a later date. Your voting instructions will be kept confidential by the trustee.

 

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As of the Disney record date, the directors and executive officers of Disney beneficially owned, in the aggregate, [●] shares of Disney common stock, representing less than 1% of the outstanding shares of Disney common stock as of the close of business on the Disney record date. The directors and executive officers of Disney have informed Disney that they currently intend to vote all such shares of Disney common stock entitled to vote “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal. As of [●], 2018, the directors and executive officers of 21CF beneficially owned approximately [●] shares of Disney common stock, representing less than 1% of the shares of Disney common stock then outstanding and entitled to vote.

Proxies and Revocations

If you are a stockholder of record, you may have your shares of Disney common stock voted on matters presented at the Disney special meeting in any of the following ways:

 

    by telephone or over the Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control number provided on your proxy card is designed to verify your identity when voting by telephone or by Internet. Proxies delivered over the Internet or by telephone must be submitted by 11:59 p.m. (Eastern Time) on [●], 2018. Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible;

 

    by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

    in person—you may attend the Disney special meeting and cast your vote there.

If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Disney common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the Disney special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the Disney special meeting.

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you choose to submit a proxy by mailing a proxy card, your proxy card should be mailed in the accompanying prepaid reply envelope, and your proxy card must be received by the time the Disney special meeting begins.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, will vote your shares of Disney common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Disney common stock should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the Disney special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares of Disney common stock should be voted on a matter, the shares of Disney common stock represented by your properly signed proxy will be voted “FOR” the share issuance proposal and “FOR” the Disney adjournment proposal.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by signing and returning a new proxy card with a later date, by attending the Disney special meeting and voting in person or by giving written notice of revocation to Disney prior to the time the Disney special meeting begins. Written notice of revocation should be mailed to: The Walt Disney Company, Attention: Secretary, 500 South Buena Vista Street, Burbank, California 91521. If you have instructed a broker, bank or other nominee to vote your shares, you may revoke your proxy by following the directions received from your bank, broker or other nominee to change those instructions.

 

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If you have any questions or need assistance voting your shares, please contact Innisfree, Disney’s proxy solicitor, at 501 Madison Avenue, 20th floor, New York, New York 10022. Banks and brokers call collect: (212) 750-5833; stockholders call toll free: (877) 717-3923.

IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF DISNEY COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE DISNEY SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. DISNEY STOCKHOLDERS WHO ATTEND THE DISNEY SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Adjournments and Postponements

Although it is not currently expected, the Disney special meeting may be adjourned on one or more occasions for the purpose of soliciting additional proxies if there are insufficient votes at the time of the Disney special meeting to approve the share issuance proposal or if a quorum is not present at the Disney special meeting. However, the combination merger agreement provides that Disney may not adjourn the special meeting for more than an aggregate of 15 days for the purpose of soliciting additional proxies or obtaining a quorum. Any adjournment of the Disney special meeting for the purpose of soliciting additional proxies will allow Disney stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Disney special meeting as adjourned.

Disney may also postpone or adjourn the special meeting to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that Disney has determined, after consultation with outside legal counsel, is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by stockholders of Disney prior to the Disney special meeting.

An adjournment generally may be made with the affirmative vote of the holders of a majority of the shares of Disney common stock present in person or represented by proxy and entitled to vote thereon.

Anticipated Date of Completion of the Transactions

Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Combination Merger Agreement—Conditions to Completion of the Transactions” beginning on page [●] of this joint proxy statement/prospectus, including the approval of the share issuance proposal by Disney stockholders at the Disney special meeting, Disney and 21CF currently expect that the transactions will be completed within 6-12 months after June 20, 2018. However, it is possible that factors outside the control of both companies could result in the transactions being completed at a different time or not at all.

Solicitation of Proxies; Payment of Solicitation Expenses

Disney has engaged Innisfree to assist in the solicitation of proxies for the Disney special meeting. Disney estimates that it will pay Innisfree a fee of approximately $50,000. Disney has agreed to reimburse Innisfree for certain out-of-pocket fees and expenses and also will indemnify Innisfree against certain losses, claims, damages, liabilities or expenses. Disney also may reimburse banks, brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Disney common stock. Disney’s directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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Questions and Additional Information

If you have additional questions about the transactions, need assistance in submitting your proxy or voting your shares of Disney common stock or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, please contact Innisfree, Disney’s proxy solicitor, at 501 Madison Avenue, 20th floor, New York, New York 10022. Banks and brokers call collect: (212) 750-5833; stockholders call toll free: (877) 717-3923.

 

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THE PARTIES TO THE TRANSACTIONS

Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

Twenty-First Century Fox, Inc., a Delaware corporation, is one of the world’s leading portfolios of cable, broadcast, film, pay TV and satellite assets spanning six continents across the globe. Reaching more than 1.8 billion subscribers in approximately 50 local languages every day, 21CF is home to a global portfolio of cable and broadcasting networks and properties, including Fox, FX, FXX, FXM, FS1, Fox News Channel, Fox Business Network, Fox Sports, Fox Sports Regional Networks, National Geographic Channels, Star India, 28 local television stations in the U.S. and more than 350 international channels; film studio Twentieth Century Fox Film; and television production studios Twentieth Century Fox Television and a 50 percent ownership interest in Endemol Shine Group. 21CF also holds approximately 39.1 percent of the issued shares of Sky, Europe’s leading entertainment company, which serves nearly 23 million households across five countries. For more information about 21CF, please visit www.21CF.com.The information provided on 21CF’s website is not part of this joint proxy statement/prospectus and is not incorporated herein by reference.

21CF’s class A common stock and class B common stock is listed on Nasdaq under the symbol “FOXA” and “FOX,” respectively.

For more information about 21CF, please visit the Internet website of 21CF at www.21cf.com. The Internet website address of 21CF is provided as an inactive textual reference only. The information contained on 21CF’s Internet website is not incorporated into, and does not form a part of, this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about 21CF is included in the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

New Fox, Inc.

c/o Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

New Fox, Inc., a wholly owned subsidiary of 21CF, is a Delaware corporation that was formed under the name of New Fox, Inc. on May 3, 2018 and whose shares will be distributed to 21CF stockholders (other than holders of hook stock shares) pursuant to the terms and conditions of the distribution merger agreement. Following the completion of the separation, which is described further beginning on page [●] of this joint proxy statement/prospectus under the heading “The Combination Merger Agreement—Separation,” New Fox will be comprised of a portfolio of 21CF’s news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network, and certain other assets, and New Fox will assume from 21CF certain liabilities associated with such businesses. Upon completion of the distribution, New Fox will be a stand-alone, publicly traded company. Until the completion of the transactions, New Fox will not conduct any activities other than those incidental to its formation and the matters contemplated by the distribution merger agreement, including in connection with the separation and the distribution. 21CF intends to change the name of New Fox, Inc. prior to the distribution.

 

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21CF Distribution Merger Sub, Inc.

c/o Twenty-First Century Fox, Inc.

1211 Avenue of the Americas

New York, New York 10036

(212) 852-7000

21CF Distribution Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of 21CF, was formed solely for the purpose of facilitating the distribution merger. Distribution Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the distribution merger, Distribution Sub will be merged with and into 21CF, with 21CF surviving the distribution merger.

The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

The Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. Disney’s home page on the Internet is www.thewaltdisneycompany.com. The information provided on Disney’s website is not part of this joint proxy statement/prospectus and is not incorporated herein by reference.

Disney’s common stock is listed on the NYSE under the symbol “DIS.”

For more information about Disney, please visit Disney’s Internet website at www.thewaltdisneycompany.com. Disney’s Internet website address is provided as an inactive textual reference only. The information contained on Disney’s Internet website is not incorporated into, and does not form a part of, this joint proxy statement/prospectus or any other report or document on file with or furnished to the SEC. Additional information about Disney is included in the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

TWDC Holdco 613 Corp.

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

TWDC Holdco 613 Corp. is a Delaware corporation and a direct wholly owned subsidiary of Disney. New Disney was incorporated on June 14, 2018, solely for the purpose of effecting the mergers and, effective at the Disney effective time, New Disney will be renamed “The Walt Disney Company.” Pursuant to the combination merger agreement, (1) Delta Sub will merge with and into Disney and (2) Wax Sub will merge with and into 21CF. As a result of the mergers, Disney and 21CF will become wholly owned subsidiaries of New Disney. As a result of the transactions contemplated by the combination merger agreement, New Disney will become a publicly traded corporation, and former Disney stockholders and former 21CF stockholders who receive 21CF stock consideration will own stock in New Disney. New Disney has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement.

 

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WDC Merger Enterprises I, Inc.

c/o The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

WDC Merger Enterprises I, Inc., a Delaware corporation and a wholly owned subsidiary of Disney, which we refer to as Delta Sub, was formed on June 14, 2018, solely for the purpose of facilitating the Disney merger. Delta Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the Disney merger, Delta Sub will be merged with and into Disney, with Disney surviving the Disney merger as a wholly owned subsidiary of New Disney.

WDC Merger Enterprises II, Inc.

c/o The Walt Disney Company

500 South Buena Vista Street

Burbank, California 91521

(818) 560-1000

WDC Merger Enterprises II, Inc., a Delaware corporation and a wholly owned subsidiary of Disney, which we refer to as Wax Sub, was formed on June 14, 2018, solely for the purpose of facilitating the 21CF merger. Wax Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the combination merger agreement. By operation of the 21CF merger, Wax Sub will be merged with and into 21CF, with 21CF surviving the 21CF merger as a wholly owned subsidiary of New Disney.

 

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THE TRANSACTIONS

This section describes the transactions. The description in this section and elsewhere in this joint proxy statement/prospectus is qualified in its entirety by reference to the complete text of the combination merger agreement, a copy of which is attached as Annex A, the distribution merger agreement, a copy of which is attached as Annex B, the pre-closing voting agreement, a copy of which is attached as Annex C, and the post-closing voting agreement, a copy of which is attached as Annex D, and which is incorporated by reference into this joint proxy statement/prospectus. This summary does not purport to be complete and may not contain all the information about the transactions that is important to you. You are encouraged to read the transaction agreements carefully and in their entirety. This section is not intended to provide you any factual information about 21CF or Disney. Such information can be found elsewhere in this joint proxy statement/prospectus and in the public filings 21CF and Disney make with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

Overview of the Transactions

Separation

Pursuant to the terms of the combination merger agreement, prior to the distribution, 21CF will enter into a separation agreement pursuant to which 21CF will, among other things, transfer to New Fox the New Fox business and New Fox will assume from 21CF certain liabilities associated with the New Fox business. As part of the transfers, an amount of cash, which shall not be less than zero, equal to the New Fox cash amount, as described in further detail in the section entitled “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus, minus certain taxes attributable to New Fox’s operations, will be transferred to New Fox. Following the separation, New Fox and its subsidiaries will own all of the New Fox business, while 21CF (other than New Fox and the New Fox subsidiaries) will own all of the retained business, including the Twentieth Century Fox film and television studios and certain cable and international television businesses. See the section entitled “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus for a full list of the assets and liabilities to be transferred.

Incurrence of New Fox Indebtedness and Payment of Dividend

Immediately prior to the distribution, 21CF is required to cause New Fox to pay to 21CF a dividend in the amount of $8.5 billion, which we refer to as the dividend, in immediately available funds. Pursuant to the terms of the combination merger agreement, 21CF is required to cause New Fox to arrange and, concurrently with and subject to the closing of the transactions, incur indebtedness in a principal amount sufficient to fund the dividend, which indebtedness will be reduced after the 21CF merger by the amount of the cash payment described below.

21CF Charter Amendment and Distribution

Pursuant to the terms of the combination merger agreement, prior to the distribution, 21CF will cause to become effective an amendment to the 21CF charter, which amendment will provide that holders of the hook stock shares will not receive any consideration in connection with the distribution or the 21CF merger. Following completion of the distribution, each 21CF stockholder (other than holders of the hook stock shares) will hold ownership interests in New Fox and 21CF proportionately equal to its existing ownership interest in 21CF (excluding the hook stock shares). In accordance with the terms of the distribution merger agreement, Distribution Sub will be merged with and into 21CF in the distribution merger. 21CF will survive the distribution merger. At effective time of the distribution merger, which we refer to as the distribution effective time:

 

   

as described in the table below, a portion of each share of 21CF class A common stock (other than the hook stock shares) will be exchanged for 1/3 of one share of New Fox class A common stock, and the

 

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remaining portion of such share of 21CF class A common stock not so exchanged will be unaffected by the distribution and will remain issued and outstanding until the 21CF merger, and

 

Portion of each share of 21CF class A common stock exchanged for 1/3 of one share of New Fox class A common stock:   Portion of a share of 21CF class A common stock that remains outstanding following the distribution:
= 1 – [1 ÷ (distribution adjustment multiple)]   = 1 – {1 – [1 ÷ (distribution adjustment multiple)]}

 

    as described in the table below, a portion of each share of 21CF class B common stock (other than the hook stock shares) will be exchanged for 1/3 of one share of New Fox class B common stock, and the remaining portion of such share of 21CF class B common stock not so exchanged will be unaffected by the distribution and will remain issued and outstanding.

 

Portion of each share of 21CF class B common stock exchanged for 1/3 of one share of New Fox class B common stock:   Portion of a share of 21CF class B common stock that remains outstanding following the distribution:
= 1 – [1 ÷ (distribution adjustment multiple)]   = 1 – {(1 – [1 ÷ (distribution adjustment multiple)]}

The distribution adjustment multiple is calculated as follows: distribution adjustment multiple = (21CF’s fully diluted pre-distribution market capitalization) ÷ [(21CF’s fully diluted pre-distribution market capitalization) – (New Fox’s fully diluted when-issued market capitalization)]. For additional information on the distribution adjustment multiple, see the section entitled “The Transactions—Overview of the Transactions—Distribution Adjustment” beginning on page [●] of this joint proxy statement/prospectus.

For purposes of this calculation, 21CF’s fully diluted pre-distribution market capitalization will be determined based on the volume weighted average price of 21CF class A common stock and 21CF class B common stock measured over the five trading day period ending on (and including) the trading day immediately prior to the distribution. New Fox’s fully diluted when-issued market capitalization will be determined based on the volume weighted average price of New Fox class A common stock and New Fox class B common stock (based on when-issued trading) measured over the five trading day period ending on (and including) the trading day immediately prior to the distribution. If shares of New Fox class A common stock and New Fox class B common stock trade (on a when-issued basis) for fewer than five days before the date of the distribution, New Fox’s fully diluted market capitalization will be determined based on the volume weighted average prices for the entire period during which such shares trade prior to the date of the distribution.

Accordingly, following the completion of the distribution, each 21CF stockholder (other than holders of the hook stock shares) will own a portion of a share less for each share of 21CF common stock owned by such holder immediately prior to the distribution effective time. The proportionate ownership of each 21CF stockholder in 21CF (excluding the hook stock shares) will not change as a result of the distribution. The 21CF merger consideration will be automatically adjusted to take into account the exchange of a portion of each share of 21CF for New Fox Common Stock, such that the remaining fractional share of 21CF common stock resulting from the distribution will receive the amount of 21CF merger consideration that a whole share of 21CF common stock would have been entitled to receive before giving effect to the distribution. See the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers” beginning on page [●] of this joint proxy statement/prospectus. 21CF stockholders will receive cash in lieu of any portion of each shares of New Fox they otherwise would have been entitled to receive in connection with the distribution, and the portion of each share of 21CF after completion of the distribution will remain outstanding until the 21CF merger. For further information, see the section entitled “The Transactions—Overview of the Transaction—The Mergers, Effects of the Merger” beginning on page [●] of this joint proxy statement/prospectus and “The Distribution Merger Agreement—Consideration for the Distribution Merger” beginning on page [●] of this joint proxy statement/prospectus.

 

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The Mergers; Effects of the Mergers

Following the completion of the distribution, the combination merger agreement provides for two mergers, which will occur in immediate succession.

First, at 12:01 a.m. (New York City time) on the date immediately following the date of the distribution, Delta Sub will merge with and into Disney. Disney will survive the Disney merger as a wholly owned subsidiary of New Disney. We refer to the effective time of the Disney merger as the Disney effective time. At the Disney effective time, each share of Disney stock issued and outstanding immediately prior to the Disney merger will be converted into one share of New Disney stock of the same class and New Disney will be renamed “The Walt Disney Company.”

Second, at 12:02 a.m. (New York City time) on the same date, Wax Sub will merge with and into 21CF. 21CF will survive the 21CF merger as a wholly owned subsidiary of New Disney. We refer to the effective time of the 21CF merger as the 21CF effective time. We refer to the Disney merger and the 21CF merger collectively as the mergers. At the 21CF effective time, each issued and outstanding share of 21CF common stock (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for, at the election of the holder thereof and subject to automatic proration and adjustment provisions contained in the combination merger agreement, the 21CF cash consideration or the 21CF stock consideration.

At the 21CF effective time, each issued and outstanding share of 21CF common stock (other than (i) shares held in treasury by 21CF that are not held on behalf of third parties, (ii) hook stock shares and (iii) shares held by 21CF stockholders who have not voted in favor of the 21CF merger and perfected and not withdrawn a demand for appraisal rights pursuant to Delaware law) will be exchanged for, at the election of the holder thereof and subject to automatic proration and adjustment contained in the combination merger agreement, the 21CF cash consideration or the 21CF stock consideration.

The value of the 21CF merger consideration may fluctuate with the average Disney stock price. Subject to the election, proration and adjustment procedures described below, each share of 21CF common stock will be exchanged for an amount, payable in cash or New Disney common stock, equal to the per share value, without interest. The number of shares of New Disney common stock to be delivered in exchange for each share of 21CF common stock to 21CF stockholders electing to receive the 21CF stock consideration will be equal to the per share value divided by the average Disney stock price. Holders of 21CF common stock who make no election may receive the 21CF cash consideration, the 21CF stock consideration or a combination of the two in exchange for their shares, as more fully described in the section entitled “The Combination Merger Agreement—The Mergers; Effects of the Mergers—Proration and Reallocation” beginning on page [●] of this joint proxy statement/prospectus. Whether a 21CF stockholder makes a cash election, a stock election or no election, the value of the consideration that such stockholder receives as of the closing date of the 21CF merger will be approximately equivalent based on the average Disney stock price used to calculate the 21CF merger consideration.

The per share value before giving effect to the tax adjustment amount is calculated as follows:

per share value = (50.0% * $38.00) + (50% * average Disney stock price * exchange ratio)

After giving effect to the tax adjustment amount, which may be positive or negative, the per share value will be calculated as follows:

per share value = [50.0% * ($38.00 + tax adjustment amount)] + {50.0% * average Disney stock price * [exchange ratio + (tax adjustment amount ÷ $103.926)]}.

The tax adjustment amount that is applied to the stock component of the per share value is divided by $103.926, which is the reference price per share of Disney common stock used to set the exchange ratio, in order

 

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to translate the tax adjustment amount into a number that represents a fraction of a share of Disney common stock. The $103.926 reference price per share of Disney common stock represents the volume weighted average price of Disney common stock over the 20-trading day period ending on June 18, 2018. The reference price for this purpose is fixed, and will not change based on the price of Disney common stock.

The exchange ratio is established in accordance with the combination merger agreement and may be fixed or floating pursuant to a collar based on the average Disney stock price. The exchange ratio in the combination merger agreement will be determined as follows:

 

    if the average Disney stock price is greater than $114.32, then the exchange ratio will be 0.3324;

 

    if the average Disney stock price is greater than or equal to $93.53 but less than or equal to $114.32, then the exchange ratio will be an amount equal to (i) $38.00 divided by (ii) the average Disney stock price; or

 

    if the average Disney stock price is less than $93.53, then the exchange ratio will be 0.4063.

Tax Adjustment Amount

As described below under “—The Mergers; Effects of the Mergers”, the 21CF merger consideration that 21CF stockholders will be entitled to receive for each share of 21CF common stock they hold may be subject to the tax adjustment amount. The tax adjustment amount will be calculated as follows:

tax adjustment amount = the equity adjustment amount ÷ 1,877,000,000.

The equity adjustment amount, which may be positive or negative, represents the dollar amount by which the final estimate of the transaction tax at closing differs from the $8.5 billion estimate of the transaction tax that was used to set the 21CF merger consideration, net of the cash payment, if any, and is calculated as follows:

equity adjustment amount = ($8.5 billion) – (the amount of the transaction tax) – (the amount of the cash payment, if any).

The calculation of the tax adjustment amount divides the equity adjustment amount by 1,877,000,000 in order to calculate the portion of the equity adjustment amount to be borne by each share of 21CF common stock. 1,877,000,000 represents an estimate of the fully diluted number of shares of 21CF common stock outstanding as of June 18, 2018. The tax adjustment amount will be positive if the amount of the transaction tax is less than $6.5 billion, and will be negative if the amount of the transaction tax is greater than $8.5 billion. The tax adjustment amount will be zero if the transaction tax is between $6.5 billion and $8.5 billion because the cash payment will offset the difference between the amount of the transaction tax and $8.5 billion.

The transaction tax is an amount that will be estimated by Disney and 21CF to equal the sum of (a) the amount of taxes (other than any hook stock taxes or taxes as a result of any hook stock elimination) imposed on 21CF and its subsidiaries as a result of the separation and distribution, which we refer to as spin taxes, (b) an amount in respect of divestiture taxes, as described in further detail in the section entitled “The Combination Merger Agreement—Tax Matters—Divestiture Taxes” beginning on page [●] of this joint proxy statement/prospectus and (c) the amount of taxes imposed on 21CF and its subsidiaries as a result of the operations of the New Fox business from and after January 1, 2018 through the closing of the transactions, but only to the extent such taxes exceed an amount of cash, which will not be less than zero, equal to the New Fox cash amount, as described in further detail in the section entitled “The Combination Merger Agreement—Separation” beginning on page [●] of this joint proxy statement/prospectus.

The elements of the transaction tax will be determined by a model, which may include certain simplifying assumptions and will be developed by Disney and 21CF and their respective representatives, working together in good faith between the date of the combination merger agreement and the closing date, which model we refer to

 

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as the tax model. For purposes of determining the transaction tax, the amount of spin taxes shall be calculated based on the enterprise value of New Fox, which is the sum of the equity value of New Fox (based on the volume weighted average trading price of New Fox stock on the date of the distribution) and the amount of gross liabilities of New Fox determined pursuant to the tax model, and assuming that no required divestitures are made and that the cash payment (if made) increases the tax asset basis of New Fox dollar-for-dollar.

See the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus for a more detailed discussion of the transaction tax calculation. See the section entitled “The Transactions—Sensitivity Analysis” beginning on page [●] of this joint proxy statement/prospectus for additional information on the sensitivity of the per share value of the 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the transaction tax and the average Disney stock price.

As described in the section entitled “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●], it is likely that the final estimate of the tax liabilities taken into account will differ materially from $8.5 billion, which was used to set the 21CF merger consideration. Accordingly, under certain circumstances, there could be a material adjustment to the 21CF merger consideration. Because of the tax adjustment amount, the amount of cash or shares of New Disney common stock that 21CF stockholders will receive in the 21CF merger cannot be determined until immediately prior to the completion of the 21CF merger. Each hook stock share will be unaffected by the 21CF merger and will remain outstanding as a share of common stock of 21CF.

No fractional shares of New Disney common stock will be issued in the 21CF merger, and 21CF stockholders will receive cash in lieu of any fractional shares of New Disney common stock they otherwise would have been entitled to receive in connection with the 21CF merger.

Distribution Adjustment

As described in the section entitled “The Combination Merger Agreement—21CF Charter Amendment and Distribution”, the 21CF merger consideration will be automatically adjusted to take into account the exchange of a portion of each share of 21CF for 1/3 of one share of New Fox common stock of the same class, pursuant to the distribution, such that the portion of each share of 21CF common stock resulting from the distribution will receive the amount of 21CF merger consideration that a whole share of 21CF common stock would have been entitled to receive before giving effect to the distribution. To give effect to the distribution adjustment, the per share value, after giving effect to the tax adjustment amount, will be multiplied by the distribution adjustment multiple. See the section entitled “The Transactions—Distribution” beginning on page [●] of this joint proxy statement/prospectus.

As an example of the distribution adjustment, assume the following:

 

    a distribution multiple of 1.25 (5/4);

 

    a per share value after giving effect to the tax adjustment amount of $38.00; and

 

    an example 21CF stockholder who owns 120 shares of 21CF common stock.

In this example, 20% (1/5) of each share of 21CF common stock (other than hook stock shares) will be exchanged in the distribution for 1/3 of one share of New Fox common stock of the same class. The remaining 80% (4/5) of each share of 21CF common stock will be unaffected by the distribution and remain issued and outstanding until the 21CF merger. Following the distribution, the example 21CF stockholder will have 8 shares of New Fox common stock of the same class as its 21CF shares, and 96 shares of 21CF common stock, which 21CF shares will remain issued and outstanding until the 21CF merger. The 21CF merger consideration will be adjusted to take the distribution into account by multiplying the per share value after giving effect to the tax

 

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adjustment amount of $38.00 in this example by the distribution adjustment multiple, resulting in per share consideration of $47.50. Multiplying this by the example 21CF stockholder’s 96 shares results in total consideration to the example 21CF stockholder in the 21CF merger of $4,560.00. This is the same amount of consideration that the example 21CF stockholder would have received if its original aggregate total of 120 shares of 21CF common stock had been exchanged for $38.00 per share.

Proration and Reallocation

Under the combination merger agreement, New Disney and Disney will deliver an aggregate of $35.7 billion, plus fifty percent of the equity adjustment amount (if greater than zero), in cash to 21CF stockholders pursuant of the 21CF merger. In order to deliver this aggregate cash amount, the combination merger agreement provides for pro rata adjustments to and reallocation of the cash and stock elections made by 21CF stockholders, as well as the allocation of consideration to be paid with respect to no election shares. No election shares will be exchanged for the 21CF cash consideration, the 21CF stock consideration or a combination of both. Accordingly, depending on the elections made by other 21CF stockholders, each 21CF stockholder who elects to receive New Disney common stock for all of their shares in the 21CF merger may receive a portion of their consideration in cash, and each 21CF stockholder who elects to receive cash for all of their shares in the 21CF merger may receive a portion of their consideration in New Disney common stock.

If the elected cash consideration, which is the amount equal to the aggregate number of cash election shares multiplied by the per share value, exceeds the maximum cash amount, then:

 

    all stock election shares and all no election shares will be exchanged for the 21CF stock consideration; and

 

    a portion of the cash election shares of each 21CF stockholder will be exchanged for the 21CF cash consideration as follows, and the remaining portion of such stockholder’s cash election shares will be exchanged for the 21CF stock consideration:

cash election shares = (number of such stockholder’s cash election shares) * [(maximum cash amount) ÷ (elected cash consideration)]

If the elected cash consideration is less than the maximum cash amount, which difference we refer to as the shortfall amount, then:

 

    all cash election shares will be exchanged for the 21CF cash consideration; and

 

    all stock election shares and no election shares will be treated in the following manner:

 

    if the shortfall amount is less than or equal to the product of the aggregate number of no election shares and the per share value, which we refer to as the no election value, then (1) all stock election shares will be exchanged for the 21CF stock consideration and (2) the no election shares of each 21CF stockholder, calculated as follows, will be exchanged for the 21CF cash consideration as follows (and the remaining portion of such stockholder’s no election shares, if any, will be exchanged for the 21CF stock consideration):

no election shares = (number of no election shares of such stockholder) * [(shortfall amount) / (no election value)]

 

    if the shortfall amount is more than the no election value, then (1) all no election shares will be exchanged for the 21CF cash consideration and (2) a portion of the stock election shares of each stockholder will be exchanged for the 21CF cash consideration as follows (and the remaining portion of such stockholder’s stock election shares will be exchanged for the 21CF stock consideration):

stock election shares = (number of stock election shares of such stockholder) * {(shortfall amount – no election value) / [(aggregate number of stock election shares) * (the per share value)]}

 

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If the elected cash consideration equals the maximum cash amount, then: (1) all cash election shares will be converted into the right to receive the 21CF cash consideration and (2) all stock election shares and all no election shares will be converted into the right to receive the 21CF stock consideration.

Sensitivity Analysis

The following table illustrates the sensitivity of the per share value of 21CF merger consideration and the amount of the cash payment payable to New Fox to changes in the amount of the final estimate of the transaction tax and the average Disney stock price. The table provides this sensitivity assuming (1) an average Disney stock price of $103.926, which is the mid-point of the collar and the reference price per share of Disney common stock used to set the 21CF merger consideration, (2) an average Disney stock price of $119.51 (15% greater than $103.926), which results in a fixed exchange ratio of 0.3324, and (3) an average Disney stock price of $88.34 (15% less than $103.936), which results in a fixed exchange ratio of 0.4063. However, it is possible that the final estimate of the transaction tax and/or the average Disney stock price could be outside of the ranges illustrated below. No assurances can be made regarding future events, and the final estimate of the transaction tax may differ materially from the sensitivity analysis based on differences in each of the elements of the calculation of the transaction tax. The final estimate of the transaction tax at closing is subject to a number of uncertainties, including that such estimate will be based on: (i) tax rates in effect on the closing date; (ii) a model to be developed by 21CF and Disney in good faith that will include reasonable estimates and assumptions with respect to matters such as the liabilities of the New Fox business on the date of the distribution; (iii) the volume weighted average trading price of New Fox stock on the date of the distribution; and (iv) the tax effect of certain divestitures and the operations of the New Fox business, none of which can be known at this time. Accordingly, at the time of the 21CF special meeting and the Disney special meeting, 21CF stockholders and Disney stockholders will not know, or be able to determine, the number or value of the shares of New Disney common stock or the amount of cash that will be issued and delivered to 21CF stockholders upon the consummation of the transactions. This information is illustrative only and should not be relied upon as being necessarily indicative of actual future results.

The table below does not give effect to the exchange of a portion of each share of 21CF common stock for 1/3 of one share of New Fox common stock in the distribution, which will have no impact on the value of the 21CF merger consideration.

21CF expects that the amount of spin taxes will have the most significant effect on the final estimate of the transaction tax and, therefore, any adjustment to the 21CF merger consideration and the cash payment payable to New Fox. 21CF also expects that the volume weighted average trading price of New Fox stock on the date of the distribution, which cannot be known at this time or at any time prior to the close of trading on the date of the distribution, will have the most significant effect on the amount of spin taxes.

For purposes of the below tables, 21CF and Disney have assumed that, consistent with the RemainCo Pro Forma Financial Statements and the New Disney Pro Forma Financial Statements, no divestitures will be required in connection with the consummation of the transactions. Regulatory review of the transactions is ongoing. At this time, no governmental authority has indicated that any divestitures will be required in order for the transactions to be consummated. Therefore, $0 of divestiture tax is included in the illustrative sensitivity analysis set forth below. For further information, see the sections entitled “The Transactions—Regulatory Approvals” beginning on page [●] of this joint proxy statement/prospectus and “Risk Factors—Risks Relating to the Transactions—In order to consummate the transactions, Disney and 21CF must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions, consummation of the transactions may be jeopardized or the anticipated benefits of the transactions could be reduced.” beginning on page [●] of this joint proxy statement/prospectus.

For purposes of the below table, 21CF and Disney have assumed that, consistent with the RemainCo Pro Forma Financial Statements and the New Disney Pro Forma Financial Statements, the amount of taxes imposed

 

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on 21CF and its subsidiaries as a result of the operations of the New Fox business from and after January 1, 2018 through the closing of the transactions will not exceed the New Fox cash amount. In order for operational taxes to have an effect on the cash payment payable to New Fox and, potentially, the per share value of the 21CF merger consideration, the amount of such taxes must exceed the amount of cash generated from the operations of the New Fox business during the applicable period, plus $600 million. 21CF does not expect this to occur. Therefore, $0 of operational tax is included in the illustrative sensitivity analysis set forth below.

These assumptions could prove incorrect, circumstances could change or intervening events could affect the final estimate of the transaction tax, including factors outside 21CF’s or Disney’s control. 21CF and Disney do not intend to update the sensitivity analysis set forth below. See “The Combination Merger Agreement—Tax Matters—Transaction Tax Calculation” beginning on page [●] of this joint proxy statement/prospectus for further detail on the calculation of the transaction tax.

 

(Dollar values expressed in billions of dollars, except per share value)  

Spin taxes

   $ 4.50      $ 6.50      $ 8.50      $ 10.50      $ 12.50  

Divestiture taxes

   $ 0      $ 0      $ 0      $ 0      $ 0  

Operational taxes

   $ 0      $ 0      $ 0      $ 0      $ 0  

Transaction tax

   $ 4.50      $ 6.50      $ 8.50      $ 10.50      $ 12.50  

Per Share Value (assuming average Disney stock price of $103.926)

   $ 39.07      $ 38.00      $ 38.00      $ 36.93      $ 35.87  

Per Share Value (assuming average Disney stock price of $88.34)

   $ 37.93      $ 36.95      $ 36.95      $ 35.96      $ 34.98  

Per Share Value (assuming average Disney stock price of $119.51)

   $ 40.01      $ 38.86      $ 38.86      $ 37.72      $ 36.57  

Cash payment to New Fox

   $ 2.00      $ 2.00      $ 0      $ 0      $ 0  

Substantial uncertainty exists regarding the final estimate of the transaction tax. 21CF does not currently have the information necessary to determine the final estimate of the transaction tax, and it will not have such information at the time of the 21CF special meeting or the Disney special meeting. If there is a downward adjustment to the 21CF merger consideration, both the 21CF stock consideration and the 21CF cash consideration will be reduced. If there is an upward adjustment to the 21CF merger consideration, Disney stockholders’ aggregate ownership and voting interest in the combined company would be proportionately reduced by the incremental amount of 21CF stock consideration that will be delivered to 21CF stockholders.

Sky Acquisition

21CF currently has an approximately 39% interest in Sky. In December 2016, 21CF issued an announcement disclosing the terms of the Sky acquisition, at a price of £10.75 per share, payable in cash, subject to certain payments of dividends.

The Sky acquisition has received unconditional clearance by all competent competition authorities including the European Commission, and has been cleared on public interest and plurality grounds in all of the markets in which Sky operates outside of the UK, including Austria, Germany, Italy and the Republic of Ireland. However, the Sky acquisition remains subject to approval by the UK Secretary of State for Digital, Culture, Media and Sport and the requisite approval of Sky shareholders unaffiliated with 21CF, as well as to certain other customary closing conditions.

In connection with the approval sought from the UK Secretary of State for Digital, Culture, Media and Sport, 21CF has undertaken to the Secretary of State to separate the Sky News business into a separate company, which we refer to as Sky News Newco, and to transfer the shares in Sky News Newco to Disney or to an alternative suitable third party if Disney did not complete its acquisition of Newco within a specified period, which we refer to as the Sky News Divestment. The Sky News Divestment is conditional upon the Sky

 

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acquisition completing. 21CF and Disney have agreed to provide financial support to the current level of funding (adjusted by cost inflation) and further possible capital expenditure to Sky News Newco for a period of 15 years after the Sky News Divestment such that the total funds available for Sky News, including the funding 21CF has undertaken to provide, is no less than £100 million per year for the next 15 years. Disney has undertaken to continue to operate Sky News for a period of 15 years after the Sky News Divestment and may only sell Sky News Newco with the approval of the Secretary of State. Disney and 21CF have undertaken that the Sky News Newco board of Directors shall consist of directors that are independent of 21CF, News Corp, any member of the Murdoch family or companies controlled by the Murdoch family. The Secretary of State has stated that he proposes to accept the undertakings provided by 21CF and Disney and, as is required, has published the undertakings for public consultation.

If the Sky acquisition is not completed by 21CF and another party has not acquired more than 50% of the ordinary shares of Sky, in each case prior to the completion of the transactions, New Disney will be required to make a mandatory offer for all the outstanding ordinary shares of Sky not already owned by 21CF. The U.K. Takeover Panel has previously ruled that such mandatory offer would be required to be at a price of £10.75 per share. The U.K. Takeover Panel has not made any revised ruling at this time.

On April 25, 2018, Comcast announced the Comcast Sky offer, which was subject to regulatory pre-conditions (which have now been satisfied) as well as additional closing conditions. Following announcement of the Comcast Sky offer, on April 25, 2018, the independent committee of the Sky Board of Directors, which we refer to as the Sky independent committee, withdrew its previously announced recommendation that unaffiliated Sky shareholders vote in favor of the Sky acquisition and 21CF received from Sky a written notice of termination of the cooperation agreement entered into on December 15, 2016 between 21CF and Sky, which we refer to as the Sky cooperation agreement, pursuant to which 21CF and Sky had agreed to certain matters in relation to the Sky acquisition. Certain provisions relating to 21CF’s conduct of the Sky acquisition survive the termination of the Sky cooperation agreement.

Notwithstanding the termination of the Sky cooperation agreement, Sky has stated that the Sky independent committee intends to cooperate fully with both 21CF and Comcast to secure the relevant approvals to satisfy the pre-conditions for both offers. 21CF remains committed to the Sky acquisition and is currently considering its options. Completion of the Sky acquisition is not a condition to either party’s obligation to consummate the transactions.

Background of the Transaction

Each of the 21CF board and the Disney board and their respective senior management regularly review and discuss their company’s performance, business strategy and competitive position in the industries in which it operates. In addition, such boards and senior management regularly review and evaluate various strategic alternatives, including acquisitions, dispositions and other strategic transactions, as part of ongoing efforts to strengthen their respective overall business and enhance stockholder value.

As part of its ongoing evaluations, the 21CF board has considered and executed a number of strategic transactions, including, among others, the disposition of Sky Italia and Sky Deutschland to Sky (formerly known as BSkyB) in 2014, the formation of a joint venture that created the Endemol Shine Group in 2014, the expansion of an existing relationship with National Geographic Society in 2015 and the Sky acquisition announced in 2016. Similarly, the Disney board has considered and executed a number of strategic transactions, including, among others, Disney’s acquisitions of Pixar in 2006, Marvel Entertainment in 2010 and Lucasfilm in 2013 and Disney’s acquisition of a majority stake in BAMTech in 2017. In addition, in the course of each of 21CF and Disney conducting their own strategic reviews and planning, representatives of 21CF and Disney have, from time to time, discussed with various companies in the media industry potential business combination transactions that might expand their respective businesses, improve their respective consumer offerings and enhance stockholder value.

 

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On August 9, 2017, K. Rupert Murdoch, Executive Chairman of 21CF, and Robert A. Iger, Chairman and Chief Executive Officer of Disney, met in Los Angeles, California. At this meeting, as they had from time to time in the past, Mr. Rup