Essay on The Merger Between Disney And Pixar

774 Words Nov 7th, 2016 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 Pixar, both companies specialized in different stages of the production process. Disney was known for their ability to create and distribute cartoon films, but were in need of Pixar’s superior ability to create the animation for those films. What made this deal interesting was the two company’s history. Both companies had worked with one another several times including their collaboration towards creating a software for computer-assisted 2D animated productions. Furthermore, both companies agreed upon a $26 million deal in 1991 to co-produce three movies including Toy Story which was released in 1995 [5]. As part of this deal, Disney agreed to fund, market and distribute the movie in return for…

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