Disney to Acquire Pixar; Long-time Creative Partners Form New Worldwide Leader in Quality Family Entertainment
January 24 2006 - 4:15PM
Business Wire
The Walt Disney Company (NYSE: DIS): -- Ed Catmull Named President
of the Combined Pixar and Disney Animation Studios and John
Lasseter Named Chief Creative Officer; Steve Jobs to Join Disney's
Board of Directors -- Disney Increases Stock Repurchase
Authorization Furthering its strategy of delivering outstanding
creative content, Robert A. Iger, President and Chief Executive
Officer of The Walt Disney Company (NYSE: DIS), announced today
that Disney has agreed to acquire computer animation leader Pixar
(NASDAQ: PIXR) in an all-stock transaction, expected to be
completed by this summer. Under terms of the agreement, 2.3 Disney
shares will be issued for each Pixar share. Based on Pixar's fully
diluted shares outstanding, the transaction value is $7.4 billion
($6.3 billion net of Pixar's cash of just over $1 billion)(a). This
acquisition combines Pixar's preeminent creative and technological
resources with Disney's unparalleled portfolio of world-class
family entertainment, characters, theme parks and other franchises,
resulting in vast potential for new landmark creative output and
technological innovation that can fuel future growth across
Disney's businesses. Garnering an impressive 20 Academy Awards,
Pixar's creative team and global box office success have made it a
leader in quality family entertainment through incomparable
storytelling abilities, creative vision and innovative technical
artistry. "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. 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," Iger said. "The addition of Pixar
significantly enhances Disney animation, which is a critical
creative engine for driving growth across our businesses. This
investment significantly advances our strategic priorities, which
include -- first and foremost -- delivering high-quality,
compelling creative content to consumers, the application of new
technology and global expansion to drive long-term shareholder
value." Pixar President Ed Catmull will serve as President of the
new Pixar and Disney animation studios, reporting to Iger and Dick
Cook, Chairman of The Walt Disney Studios. In addition, Pixar
Executive Vice President John Lasseter will be Chief Creative
Officer of the animation studios, as well as Principal Creative
Advisor at Walt Disney Imagineering, where he will provide his
expertise in the design of new attractions for Disney theme parks
around the world, reporting directly to Iger. Pixar Chairman and
CEO Steve Jobs will be appointed to Disney's Board of Directors as
a non-independent member. With the addition of Jobs, 11 of Disney's
14 directors will be independent. Both Disney and Pixar animation
units will retain their current operations and locations. "Disney
and Pixar can now collaborate without the barriers that come from
two different companies with two different sets of shareholders,"
said Jobs. "Now, everyone can focus on what is most important,
creating innovative stories, characters and films that delight
millions of people around the world." "Pixar's culture of
collaboration and innovation has its roots in Disney Animation. Our
story and production processes are derivatives of the Walt Disney
`school' of animated filmmaking," said Dr. Catmull. "Just like the
Disney classics, Pixar's films are made for family audiences the
world over and, most importantly, for the child in everyone. We can
think of nothing better for us than to continue to make great
movies with Disney." The acquisition brings to Disney the talented
creative teams behind the tremendously popular original Pixar
blockbusters, who will now be involved in the nurturing and future
development of these properties, including potential feature
animation sequels. Pixar's 20-year unrivaled creative track record
includes the hits Toy Story, Toy Story 2, A Bug's Life, Monsters,
Inc., Finding Nemo and The Incredibles. Disney will also have
increased ability to fully capitalize on Pixar-created characters
and franchises on high-growth digital platforms such as video
games, broadband and wireless, as well as traditional media
outlets, including theme parks, consumer products and live stage
plays. "For many of us at Pixar, it was the magic of Disney that
influenced us to pursue our dreams of becoming animators, artists,
storytellers and filmmakers," said Lasseter. "For 20 years we have
created our films in the manner inspired by Walt Disney and the
great Disney animators -- great stories and characters in an
environment made richer by technical advances. It is exciting to
continue in this tradition with Disney, the studio that started it
all." "The wonderfully productive 15-year partnership that exists
between Disney and Pixar provides a strong foundation that embodies
our collective spirit of creativity and imagination," said Cook.
"Under this new, strengthened animation unit, we expect to continue
to grow and flourish." Disney first entered into a feature film
agreement with Pixar in 1991, resulting in the release of Toy
Story, which was hailed as an instant classic upon its release in
November 1995. In 1997, Disney extended its relationship with Pixar
by entering into a co-production agreement, under which Pixar
agreed to produce on an exclusive basis five original
computer-animated feature films for distribution by Disney. Pixar
is currently in production on the final film under that agreement,
Cars, to be distributed by Disney on June 9. The Boards of
Directors of Disney and Pixar have approved the transaction, which
is subject to clearance under the Hart-Scott-Rodino Antritrust
Improvements Act, certain non-United States merger control
regulations, and other customary closing conditions. The agreement
will require the approval of Pixar's shareholders. Jobs, who owns
approximately 50.6% of the outstanding Pixar shares, has agreed to
vote a number of shares equal to 40% of the outstanding shares in
favor of the transaction. The Disney Board was advised by Goldman,
Sachs & Co. and Bear, Stearns & Co. The Pixar Board was
advised by Credit Suisse. Separately, the Disney Board approved the
repurchase of approximately 225 million additional shares, bringing
the Company's total available authorization to 400 million shares.
Since August 2004 through the end of December 2005, Disney has
invested nearly $4 billion to purchase nearly 155 million shares.
Disney anticipates further significant share repurchases going
forward, reflecting Disney's continued commitment to returning
value to shareholders over time. (a) Based on Disney's closing
share price of $25.52 as of 1/23/06. About The Walt Disney Company:
The Walt Disney Company (NYSE:DIS), together with its subsidiaries
and affiliates, is a leading diversified international family
entertainment and media enterprise with four business segments:
media networks, parks and resorts, studio entertainment and
consumer products. Disney is a Dow 30 company, had annual revenues
of nearly $32 billion in its most recent fiscal year, and a market
capitalization of approximately $50 billion as of January 23, 2006.
Investor Conference Call: An investor conference call will take
place at approximately 2:15 p.m. PT / 5:15 p.m. ET today, January
24, 2006. To listen to the Webcast, turn your browser to
www.disney.com/investors/presentations or
http://corporate.pixar.com. If you cannot participate in the live
Webcast, re-plays will be available for domestic callers at (888)
286-8010 (PIN 56666399) and for international callers at (617)
801-6888 (PIN 56666399), or at
www.disney.com/investors/presentations until 4:00 p.m. PT on
Tuesday, February 7, 2006. An .mp3 version of this Webcast replay
will also be available approximately 24 hours after the Webcast
concludes at www.disney.com/investors/presentations.
Forward-Looking Statements: Certain statements in this press
release may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements are made on the basis of the views and assumptions
of the management of The Walt Disney Company and Pixar regarding
future events and business performance as of the time the
statements are made and they do not undertake any obligation to
update these statements. Actual results may differ materially from
those expressed or implied. Such differences may result from legal
or regulatory proceedings or other factors that affect the timing
or ability to complete the transactions contemplated herein,
actions taken by either of the companies, including restructuring
or strategic initiatives (including capital investments or asset
acquisitions or dispositions), as well as from developments beyond
the companies' control, including: adverse weather conditions or
natural disasters; health concerns; international, political or
military developments; technological developments; and changes in
domestic and global economic conditions, competitive conditions and
consumer preferences. Such developments may affect assumptions
regarding the operations of the businesses of The Walt Disney
Company and Pixar separately or as combined entities including,
among other things, the timing of the transaction, the performance
of the companies' theatrical and home entertainment releases,
expenses of providing medical and pension benefits, and demand for
products and performance of some or all company businesses either
directly or through their impact on those who distribute our
products. Additional factors that may affect results are set forth
in the Annual Report on Form 10-K of The Walt Disney Company for
the year ended October 1, 2005 under the heading "Item 1A--Risk
Factors" and in the Quarterly Report on Form 10-Q of Pixar for the
quarter ended October 1, 2005 under the heading "Risk Factors"
section of Part I, Item 2. For Additional Information: This
material is not a substitute for the prospectus/proxy statement
Disney and Pixar will file with the Securities and Exchange
Commission. Investors are urged to read the prospectus/proxy
statement which will contain important information, including
detailed risk factors, when it becomes available. The
prospectus/proxy statement and other documents which will be filed
by Disney and Pixar with the Securities and Exchange Commission
will be available free of charge at the SEC's website, www.sec.gov,
or by directing a request when such a filing is made to The Walt
Disney Company, 500 South Buena Vista Street, Burbank, CA
91521-9722, Attention: Shareholder Services or by directing a
request when such a filing is made to Pixar, 1200 Park Avenue,
Emeryville, CA 94608. Pixar, its directors, and certain of its
executive officers may be considered participants in the
solicitation of proxies in connection with the proposed
transactions. Information about the directors and executive
officers of Pixar and their ownership of Pixar stock is set forth
in the proxy statement for Pixar's 2005 annual meeting of
shareholders. Investors may obtain additional information regarding
the interests of such participants by reading the prospectus/proxy
statement when it becomes available.
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