Disney to Acquire Pixar

Jan 24, 2006  •  Post A Comment

The highly anticipated marriage of The Walt Disney Co. and Pixar Animation came to fruition Tuesday, when Disney agreed to pay $7.4 billion in stock to acquire the respected animation studio.

As part of the deal, Disney will pay 2.3 shares of its stock for every Pixar share, which translates into $59.78 per Pixar share, a slight premium over Tuesday’s closing price of $57.57 a share. Disney will also get the $1 billion cash that Pixar has on hand.

The transaction will also make Pixar Chairman and CEO Steve Jobs the largest individual shareholder of Disney. Mr. Jobs, who had owned a controlling 50.6 percent of Pixar’s stock, will also become a nonindependent member of Disney’s board of directors.

Pixar President Ed Catmull will serve as president of the newly created Pixar and Disney animation studios and will report to Walt Disney Studios Chairman Dick Cook. Pixar Executive VP John Lasseter will become chief creative officer of animation studios and principal creative advisor at Walt Disney Imagineering, overseeing the design of new theme parks and reporting directly to Disney CEO Robert Iger.

For Mr. Iger, Tuesday’s deal caps his months-long effort to smooth relations with Mr. Jobs, who had a relationship with former CEO Michael Eisner that was so contentious that a year ago it looked as if Pixar and Disney were likely to sever a relationship that dates back to 1991.

However, ever since Mr. Iger was named the CEO-elect in March 2005, he has worked hard to rebuild a relationship with Mr. Jobs. The first sign that the freeze between Mr. Jobs and Disney might be thawing came in October, when Mr. Jobs, as CEO of Apple Computer, struck a deal with Disney to offer downloadable episodes of popular television series on iTunes Music Store.

Since that deal, the market has speculated that it was likely Pixar and Disney would resume their partnership in some fashion.