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  • Q3 Disney

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    isha
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    The document discusses whether a deal between Disney and Pixar meets two tests. It says the deal meets the "better off" test as Disney would benefit from Pixar's CG capabilities and software, lowering production costs. It also meets the "ownership" test as buying Pixar would help Disney avoid past contract issues and increase profits. The document estimates that acquiring Pixar for $6.5 billion could generate $16.9 billion in profits for Disney based on average profits per film.

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    The document discusses whether a deal between Disney and Pixar meets two tests. It says the deal meets the "better off" test as Disney would benefit from Pixar's CG capabilities and software, lowering production costs. It also meets the "ownership" test as buying Pixar would help Disney avoid past contract issues and increase profits. The document estimates that acquiring Pixar for $6.5 billion could generate $16.9 billion in profits for Disney based on average profits per film.

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    120 views1 page

    Q3 Disney

    Uploaded by

    isha
    The document discusses whether a deal between Disney and Pixar meets two tests. It says the deal meets the "better off" test as Disney would benefit from Pixar's CG capabilities and software, lowering production costs. It also meets the "ownership" test as buying Pixar would help Disney avoid past contract issues and increase profits. The document estimates that acquiring Pixar for $6.5 billion could generate $16.9 billion in profits for Disney based on average profits per film.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    3) Does this deal meet the “better off” test? The “ownership” test? Why?

     
    There exists a synergy because of the relatedness of the industries they operate in. Both Disney and Pixar
    have an overlap of users, shared resources and common distribution channels.
    Yes. The deal meets the “Better off test”. Disney is better off with Pixar’s CG capability and its
    proprietary software. The deal would result in lower costs of production, less time and effort of animators,
    and more time for working on the story.
    Yes. The deal meets the “Ownership test” as well. Disney should buy Pixar. It would help Disney mitigate
    the previous problems of contract negotiations. Increased revenue and profits with merger.
    Considering Disney can generate average profits of $260 million and it can make 65 movies with the
    acquisition cost of $6.5 billion. They can generate profits of 260*65= $16.9 billion. Thus, it only makes
    sense for Disney to acquire Pixar if it predicts it will be able to generate $ 17bn in profits through Pixar.

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