Disney Merger Case Study

774 Words 4 Pages
On January 24th, 2006, both Pixar and Walt Disney agreed to a $7.4 billion dollar merger. The purpose of this report is to discuss the two firm’s respective situations at the time of the merger in addition to their current situations today; 10 years later. Furthermore, the motives behind the mergers will discussed and the outcomes of this agreement will be analyzed in order to determine if it was ultimately a success. Lastly, the beneficiaries of the merger will be examined in order to determine whether Disney or Pixar came out further ahead.
The merger between Disney and Pixar was more specifically known as a vertical merger. A vertical merger is when two or more firms, operating at different levels within an industry’s supply chain merge operations [1]. In the case of Disney and
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It is thought that Disney’s choice to close down their hand drawn animations is what led to this decline. Due to Disney’s decline, in 2005, Michael Eisner resigned as Disney’s CEO and Bob Iger was hired. Bob Iger immediately began his reign by mending Disney’s relationship with Pixar and bringing back hand drawn animations. Iger convinced Disney that acquiring Pixar would be in the best interest of the company and the agreement would be mutually beneficial for both companies. At this time, Pixar was experiencing substantial growth (22% CAGR) [6] and their shares had increased 26% in only a couple months in 2005 [6], Pixar also understood the need for a dominant distributor in order to continue their success. Due to Iger’s emergence as Disney’s CEO, both Pixar and Disney resumed talks about a new deal. The new deal was an all-stock deal worth $7.4 billion where Disney acquired

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