DisneyMergers and Acquisitions
DisneyMergers and Acquisitions
Foundedin 1923, the Walt Disney Company was started by Walt & RoyDisney. The company was initially started as an animation studio. Itis well known for its Walt Disney Film Studios. Currently, it isamong if not the largest known studio in Hollywood. The companyfurthermore operates and owns the ABC broadcasting television networkand various cable television networks which include A+E Networks,ESPN, ABC Family and LifeTime. It also has divisions in merchandise,publishing, and theater. Furthermore, it has ownership and 14licensed parks in different countries around the world [CITATION mad14 l 1033 ].
WaltDisney is known for dreaming big and turning the ideas into reality.They view things as possible, hence the achievement of the bigdreams. This was done by establishing a huge business empire suchthat it lacks worthy competitors. Walt Disney had a successfulhistory from the start, and it has exhibited continuous growth viamergers and acquisitions and has managed to overpower itscompetitors. Together with its affiliates and subsidiaries, WaltDisney is the world’s largest & leading media conglomerate inthe world regarding revenue. The Marvel Studios and Pixar AnimationStudios are some of the company’s key acquisitions. In 2009, WaltDisney as per its target acquired Marvel after having acquired Pixarin 2006. Walt Disney has been able to maintain quality productionsand profitability after the acquisition of these two companies [CITATION mad14 l 1033 ].
TheDisney – Pixar Merger in 2006 was aimed to bring out a synergisticeffect between the two companies. The merger was worth $7.4 billionpaid by Disney to Pixar. On its part, Disney`s aim was to benefitfrom owning the most innovative computer animation studio while Pixarwas to take advantage of Walt Disney`s financial muscle and itsdistribution network. Since Disney was viewed as a leader inproviding entertainment experience from its inception, while Pixarhad a reputation in the production of animation films, the merger wasseemed to be beneficial to both companies. By merging, Disney wasable to increase its revenue. Similarly, it allowed Pixar to focus onits core strengths which were in the production of computer animationfilms. By acquisition of Pixar, Walt Disney was able to increase itsoverall welfare of the conglomerate and its employees. The mergerbetween Pixar and Disney is successful as evidenced by the moviesthey produce. Most of their films produced are always blockbusterswith a faithful viewing worldwide. They have been able to strengthentheir reputation making the company rank top in the animation filmindustry [CITATION mad14 l 1033 ].
Anotheracquisition by Disney involves that of Marvel Entertainment in 2009.Marvel was a renowned comic film studio which was acquired for $4billion. Although there was fear of possible failure that Disneywould ruin the great Marvel characters like the Avengers and IronMan, it was not the case. On the financial aspect, investors werehighly concerned that the entertainment giant could have paid excessmoney for the acquisition of Marvel. However, over time, it has beenobserved that those fears by both groups were unfounded. The Disney’spurchase of Marvel can be viewed as one of the most successfulacquisitions ever done. The only comparison to such a successfulacquisition is that of Pixar [CITATION mad14 l 1033 ].
TheAcquisition deal gave Disney Marvel`s around 5,000 characters. Inaddition to that, Disney received their licensing, movie businessesand comic books. The deal tied Disney to its rival media companiessince Marvel was committed to dealing with the other media companies.Sony Pictures and Marvel were a joint venture making Disney part ofthe deal. This is because Marvel was having a contract fordistribution of its products with Paramount Pictures while Marvelcharacters were licensed to the Universal Orlando`s parks, which areowned by Blackstone and GE`s NBC Universal. The potential benefitsthat were resulting from the acquisition of the larger Walt DisneyCompany were great. Additionally, Disney had a strong power in itsability to create valuable brands that exploit them in all itsbusinesses. Through the acquisition, Marvel`s characters were placedin safe hands [CITATION mad14 l 1033 ].
In2012, Walt Disney Company acquired LucasFilm for about $4 billion.This acquisition was one of the largest ever deal made by thecompany. Based on Disney`s stocks closing price as at Oct. 26, theacquisition deal was valued to be around $4.1 billion. Disney paidhalf the value by issuing shares worth 40 million, while the otherhalf was traded in cash. As part of the deal, the Disney Company alsotook over the Skywalker Sound, the special-effects house IndustrialLight & Magic and LucasArts. However, Disney chose to retainevery company and every employee at their location. Disney alsoaimed at expanding the presence of all the acquired businesses andcharacters by creating new theme parks [CITATION mad14 l 1033 ].
Bytapping into the potential of the LucasFilm, Walt Disney wasforecasted to quickly recover its investment by tapping the revenuesfrom the production of more theme parks, movies, and merchandise[CITATION mad14 l 1033 ].As seen, the Walt Disney Company has chosen a strategy of investingin blue-chip companies that will yield supernormal returns in itslong-term life.
Madiya Latif, J. H. (2014). Tactful Acquisitions& merger of The Walt Disney Company improved its performance, showed by financial & industry analysis. International Journal of Accounting and Financial Reporting.