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Disney-Pixar agreement could come as early as Monday
Disney's board of directors plans to discuss a possible merger on Monday.
Richard Verrier and Kim Christensen | Sentinel Staff Writer and Los Angeles Times Posted January 20, 2006
Walt Disney Co. directors on Monday plan to formally consider buying Pixar Animation Studios, whose success with such films as Toy Story and The Incredibles has redefined the animation genre Disney once dominated.
Disney Chief Executive Officer Robert Iger and his Pixar counterpart, CEO Steve Jobs, have been talking for months about extending their long-term distribution pact, which is due to end when Disney releases the computer animation studio's Cars in June.
Recent negotiations, however, have expanded to include the possibility of Disney's acquiring part or all of Pixar, with Jobs taking a seat on the Burbank, Calif., company's board and becoming a major shareholder.
A report Thursday in The Wall Street Journal that the talks had intensified further fueled speculation that a deal is imminent, sending Disney's stock higher by $1.02, to $26.24 a share. Pixar shares closed up $1.61, to $58.87.
People familiar with the negotiations cautioned that key details remain to be worked out, including Pixar's price tag. Disney would likely pay a premium to the company's current market value of nearly $7 billion.
Nonetheless, an agreement is expected, possibly as early as Monday when Disney's board meets, because the deal is seen as benefiting both parties.
The acquisition would be a major coup for Iger, who took over as Disney's chief in October and shortly turned his attention to repairing the company's fractious relationship with Pixar.
The two companies had broken off negotiations in 2004 when Jobs clashed with Iger's predecessor, Michael Eisner. But immediately after Iger took over, he signaled a thaw in the relationship by appearing with Jobs to announce that programs from Disney-owned ABC would be offered for download on Apple' new video iPod.
By acquiring Pixar, Disney would immediately resume its perch at the top of an industry it pioneered with Snow White and the Seven Dwarfs in 1937 and dominated in the 1990s with such hits as Lion King and Beauty and the Beast.
Disney faltered in recent years with such duds as Treasure Planet and Atlantis: The Lost Empire. Its latest release, Chicken Little, has been a success, but its box-office performance paled in comparison to Monsters Inc., Finding Nemo and other Pixar hits.
For Jobs, selling Pixar could allow him to focus more on running Apple Computer Inc., which is enjoying huge popularity of its iPod products. It also would make him even more of a media power player.
Some analysts have questioned how easily the companies' very different corporate cultures will mesh. Pixar is known for giving artists a wide degree of creative freedom.
But Jobs' becoming a major Disney shareholder and director "is likely to be viewed positively by the Disney faithful," Pali Capital Inc. media analyst Richard Greenfield wrote in a research note Thursday. "Investors may hope that Mr. Jobs' successful track record at Pixar and Apple will rub off more broadly on Disney," Greenfield wrote.
Disney's board of directors plans to discuss a possible merger on Monday.
Richard Verrier and Kim Christensen | Sentinel Staff Writer and Los Angeles Times Posted January 20, 2006
Walt Disney Co. directors on Monday plan to formally consider buying Pixar Animation Studios, whose success with such films as Toy Story and The Incredibles has redefined the animation genre Disney once dominated.
Disney Chief Executive Officer Robert Iger and his Pixar counterpart, CEO Steve Jobs, have been talking for months about extending their long-term distribution pact, which is due to end when Disney releases the computer animation studio's Cars in June.
Recent negotiations, however, have expanded to include the possibility of Disney's acquiring part or all of Pixar, with Jobs taking a seat on the Burbank, Calif., company's board and becoming a major shareholder.
A report Thursday in The Wall Street Journal that the talks had intensified further fueled speculation that a deal is imminent, sending Disney's stock higher by $1.02, to $26.24 a share. Pixar shares closed up $1.61, to $58.87.
People familiar with the negotiations cautioned that key details remain to be worked out, including Pixar's price tag. Disney would likely pay a premium to the company's current market value of nearly $7 billion.
Nonetheless, an agreement is expected, possibly as early as Monday when Disney's board meets, because the deal is seen as benefiting both parties.
The acquisition would be a major coup for Iger, who took over as Disney's chief in October and shortly turned his attention to repairing the company's fractious relationship with Pixar.
The two companies had broken off negotiations in 2004 when Jobs clashed with Iger's predecessor, Michael Eisner. But immediately after Iger took over, he signaled a thaw in the relationship by appearing with Jobs to announce that programs from Disney-owned ABC would be offered for download on Apple' new video iPod.
By acquiring Pixar, Disney would immediately resume its perch at the top of an industry it pioneered with Snow White and the Seven Dwarfs in 1937 and dominated in the 1990s with such hits as Lion King and Beauty and the Beast.
Disney faltered in recent years with such duds as Treasure Planet and Atlantis: The Lost Empire. Its latest release, Chicken Little, has been a success, but its box-office performance paled in comparison to Monsters Inc., Finding Nemo and other Pixar hits.
For Jobs, selling Pixar could allow him to focus more on running Apple Computer Inc., which is enjoying huge popularity of its iPod products. It also would make him even more of a media power player.
Some analysts have questioned how easily the companies' very different corporate cultures will mesh. Pixar is known for giving artists a wide degree of creative freedom.
But Jobs' becoming a major Disney shareholder and director "is likely to be viewed positively by the Disney faithful," Pali Capital Inc. media analyst Richard Greenfield wrote in a research note Thursday. "Investors may hope that Mr. Jobs' successful track record at Pixar and Apple will rub off more broadly on Disney," Greenfield wrote.
