TOPIC: THE WALT DISNEY COMPANY – PIXAR ANIMATION

STUDIOS MERGER
INTRODUCTION
➢ Reason for choosing the topic.
➢ Structure of the presentation.
PART 1: OVERVIEW OF WALT DISNEY AND PIXAR
1.1. THE WALT DISNEY COMPANY
- The background of Walt Disney.
+ Founders: Roy O. Disney, Walt Disney
+ CEO : Bob Iger (1 Oct 2005–)
+ Founded: Oct 16, 1923, in California, US
+ started making films in the 1930’s (Mickey Mouse & Donald Duck)
+ Focus on entertainment thru experiences based on creativity and memorable
storytelling
+ first films: Alice’s Wonderland, Snow White, Bambi and Pinocchio
+ 51 animated 2D films in total. Not strong in 3D animation.
- The scale of the business:
+ one of the largest media and entertainment corporations in the world/ Entertainment
giant
+ Net income: 9.08 billion USD (Dec. 2015) – 10.37 billion USD (Dec. 2019)
+ Revenue: 52.46 billion USD (2015) - 69.58 billion USD (2019)
+ Separates business into five segments (Core business)
o Media networks: ESPN, ABC
o Internet/Direct Marketing
o The Walt Disney Studios
o Consumer Products: Toys/Apparel/Food/Books and Magazines
o Theme Parks and Resorts: Disneyland
1.2. PIXAR ANIMATION STUDIOS
- The background of Pixar.
+ Founders : Alvy Ray Smith, Edwin Catmull
 + Founded: February 3, 1986, in California, US
+ Parent Company: The Walt Disney Company
+ First film: Toy story (1995) – grossed $362 million, became the biggest grosser of
1995
- The scale of the business.
PART 2: WALT DISNEY – PIXAR M&A
2.1. Disney and Pixar before M&A
- Cooperation (1991-2004)
+ 1991 Disney and Pixar signed cooperative agreement for 5 movies
+ 2004 relationship soured.

2.1.1. Problems Disney faced that led to M&A.

- Disney’s SWOT
STRENGTHS WEAKNESSES
o Brand power & Multiple o Lack of 3D CG Technology
Channels o Too much dependence on
o Experienced Pixar
o Well Established & Financial o Too Children related Images

OPPORTUNITIES THREATs
o New Boom of Animation o Pixar’s New Move
o Advent of New Media o Other Competitors
 o Easier to Distribute Contents o Piracy Issues

- Pixar’s SWOT
STRENGTHS WEAKNESSES
o Powerful 3D CG Technology o No distribution channels
o Proven Capabilities o Focused business on
o Creative & talented people animation
o Too much dependency on
Disney
OPPORTUNITIES THREATs
o Big Boom of 3D CG o Advent of new competitors
Animation o Commoditization of 3D CG
o New deal from other technology
companies o High risk
o Increased Business
Opportunity
2.1.2. The reason why Pixar was acquired by Disney.
- Steve Jobs sold Pixar to Disney because he was on good terms with Disney’s
leaders, and it’d be good for everyone.
- Disney bought Pixar because Bob Iger, the CEO, realized that their only hope
of surviving in the animation game was acquiring Pixar, which had produced
the most memorable characters Disney’s had in a decade.
2.1.3. Types of Disney – Pixar merger.
- Sales Alliance: Here both Disney and Pixar will have to works on maximizing the
profits by the marketing of their product together.
- Investment Alliance: Here both companies have to invest in the animation pictures
and both will get a share of 50% profit made from the movies.
2.2. Disney and Pixar after M&A
2.2.1. Merger information
- Price tag: US$7.4 billion in all-stock deal
- Steve Jobs: Disney’s largest individual shareholder with 7 percent stock, new
seat on board of directors
 - John Lasseter (Pixar’s co-founder): Chief Creative Officer of Pixar and Walt
Disney Animation Studios, Principal Creative Adviser at Wal Disney
Imagineering
- Ed Catmull (Pixar president): President of Pixar and Walt Disney Animation
Studios
2.2.2. The reason why this deal made a big splash (The reason for the success
of this business transaction).
- Investors saw potential for Disney to leverage on Pixar’s computer animated
character to be used in its vast networks. One successful example was “cars”. The
revenue in retail products from “cars” was over $5 million.
- Pixar’s willingness to change so as to be a part of the international conglomerate
helped.
- The companies not only followed normal tactics for successful mergers but also
came with some different ones.
+ Pixar created a list of things that would not be changed so as to preserve its
culture like Pixar employees didn’t sign employment contracts.
+ Bob Iger ensured that Pixar employees get mixed in the new environment.
2.2.3. The story behind Disney's decision to acquire Pixar (narrated by Bob
Iger).
https://youtu.be/yFLY9F5b-p8 Bob Iger Recalls Moment with Steve Jobs
https://youtu.be/YXzxmaEUUBs Bob Iger Talks About Steve Jobs and
Buying Pixar
2.2.4. The results of this deal:
- Profits:
+ Share price: 38% $35.85
+ Market Value: $64,000,000,000 (Nov. 30th, 2011)
+ Average returns to investment: 7.6%
+ Dividend: 1.1%
 + Robert A.Iger was intended to become the director of Apple.

Source: FactSet: Walt Disney’s monthly share price (2006-2011)

+ Well-known movies:
PART 3: CONCLUSION
The merger of Walt Disney and Pixar is one of the most successful corporate
mergers in these years. This acquisition was of benefit for both companies. For
Disney, it was of benefit because of innovative ideas in the animation studio and
the technology Pixar had. This merger had given many blockbuster movies till
now. The main reason for the success of the merger was the negotiations done by
both companies.