M&A

Disney Agrees to Acquire Pixar

According to Disney chief financial officer Tom Staggs, the company will spend ''$5 billion or more'' on buybacks over the next 12 months; he expec...
Stephen TaubJanuary 25, 2006

The Walt Disney Co. agreed to buy Pixar Animation Studios in an all-stock deal valued at $7.4 billion, which includes a little more than $1 billion of Pixar’s cash.

The pact combines Disney’s once-storied animation legacy with Pixar’s nearly unfathomable track record of winning 20 Academy Awards in its 20-year history. “Pixar has a track record that is unrivaled,” said Disney chief executive officer Robert Iger, according to Bloomberg.

Steve Jobs, the chief executive officer of Apple Computer Inc. and the founder of Pixar, will join Disney’s board and become the media giant’s largest shareholder. Perhaps not coincidentally, former Disney CEO Michael Eisner — who was known to have feuded with Jobs — left that post in September. Eisner will now be Disney’s second-largest shareholder.

Disney will offer 2.3 of its shares for each Pixar share; Disney had reportedly repurchased nearly 155 million of its shares between August 2004 and December 2005. According to the Financial Times, Disney chief financial officer Tom Staggs said the company would spend “$5 billion or more” on further buybacks over the next 12 months, which would also help offset earnings dilution. Staggs reportedly added that by 2008, the deal would be additive to Disney’s earnings.

Disney, which has enjoyed a 15-year relationship with Pixar, hopes not only to gain access to the younger company’s creative team and to the fruits of sequels to hit movies such as The Incredibles and Finding Nemo, but also to develop new rides at its theme parks.

“With this transaction, we welcome and embrace Pixar’s unique culture, which for two decades, has fostered some of the most innovative and successful films in history,” Iger said in a press release. “The talented Pixar team has delivered outstanding animation coupled with compelling stories and enduring characters that have captivated audiences of all ages worldwide and redefined the genre by setting a new standard of excellence.”

“Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders,” said Jobs in a press release. “Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world.”