UPDATE: Disney To Buy Marvel Enterprises For $4 Billion
August 31 2009 - 11:03AM
Dow Jones News
Walt Disney Co. (DIS) agreed to acquire Marvel Entertainment
Inc. (MVL), the creator of Spider-Man and thousands of other
characters, for about $4 billion.
The deal marks one of the largest acquisitions in Disney's
history and the first big media deal since companies began hoarding
cash last fall during the global financial crisis.
It also fits with Disney's stated strategy of driving revenue
from popular content over time across multiple platforms, and it
gives the company a boost with young male audiences, where Marvel's
characters like Iron Man, Spider-Man, X-Men, Captain America,
Fantastic Four and Thor are particularly popular. Disney has shown
more strength with females from its properties like Hannah
Montana.
Under the agreement, Marvel shareholders will receive $30 a
share in cash plus about 0.745 Disney share for each Marvel share.
Based on Friday's closing prices, the deal is valued at $50 per
Marvel share, about a 29% premium.
The companies said the amount of cash and stock in the deal will
be adjusted at closing so that the value of the Disney stock is at
least 40% of the purchase price. Besides shareholder backing, the
deal will require antitrust approval.
Miller Tabak analyst David Joyce noted that Disney is paying a
steep valuation for Marvel but he views the deal as a "good
long-term strategic move" for the company. "This is another sign
that confidence is returning to the marketplace," said Joyce.
Disney shares were down 1.7% at $26.38 in recent trading, while
Marvel shares jumped 26% to $48.79.
Marvel has long-term production and distribution deals in place
with Disney competitors, including Sony Corp.'s (SNE) Sony
Entertainment, News Corp.'s (NWS, NWSA) 20th Century Fox Films and
Viacom Inc.'s (VIA) Paramount Pictures, which complicate the
company's strategic position.
(News Corp. is the parent of Dow Jones & Co., publisher of
this news service.)
In many cases, it will take years before Disney can garner
anything more than licensing fees from some key Marvel characters,
but Disney Chief Financial Officer Tom Staggs said those revenue
are attractive and the company will have the option to produce and
distribute Marvel's content on its own when those deals expire.
"Marvel is worth more inside Disney than outside Disney," said
Staggs.
Marvel Chief Executive Ike Perlmutter called Disney "the perfect
home for Marvel's fantastic library of characters given its proven
ability to expand content creation and licensing businesses."
The comic book maker has been boosting cultural awareness of its
characters by continuing to branch out into animated television
series and live-action films. However, the company in the spring
pushed back its film schedule through 2012 as it looked to build
anticipation for its upcoming slate of films.
Marvel's results have been boosted from its film-production
business, and last year was the first year it which it began to
produce its own films, taking in all the profits instead of just
licensing fees.
In March, it formed an international advisory board made up of
business leaders from overseas markets as it looked to expand its
global presence.
-By Nat Worden, Dow Jones Newswires; (212) 416-2472;
nat.worden@dowjones.com
(Mike Barris contributed to this story)