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Disney Buys Marvel
For $4 Billion


August 31, 2009


The worldwide leader in family entertainment is about to get a great deal more entertaining, as the Walt Disney Company agrees to acquire iconic comic book company Marvel Entertainment for $4 billion.

More than 5,000 iconic comic book characters will soon be in the hands of Disney, raising serious questions about the future of Marvel video game titles from Activision, Sega, THQ, and the upcoming MMO from Gazillion Entertainment. Under the terms of the agreement, Disney will pay Marvel shareholders $30 per share for their Marvel stock, plus .745 of a share of Disney stock for each share they own.

"This transaction combines Marvel's strong global brand and world-renowned library of characters including Iron Man, Spider-Man, X-Men, Captain America, Fantastic Four and Thor with Disney's creative skills, unparalleled global portfolio of entertainment properties, and a business structure that maximizes the value of creative properties across multiple platforms and territories," said Robert A. Iger, President and Chief Executive Officer of The Walt Disney Company. "Ike Perlmutter and his team have done an impressive job of nurturing these properties and have created significant value. We are pleased to bring this talent and these great assets to Disney." That's Disney's say on the matter, and here is Marvel's, from the official press release:

"Disney is the perfect home for Marvel's fantastic library of characters given its proven ability to expand content creation and licensing businesses," said Ike Perlmutter, Marvel's Chief Executive Officer. "This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney's tremendous global organization and infrastructure around the world."

Disney's chief executive, Bob Iger, said Marvel had a "treasure trove" of intellectual property that "transcends gender, age, culture and geographical barriers".

"There are so many opportunities to mine both characters that are known and characters that are not widely known," Iger said.

The tie-up is one of the largest US corporate transactions of the summer and marks a remarkable turnaround for Marvel, originally a comic book company, which filed for bankruptcy in 1996 under heavy debts as it faced a slump in comic book sales.

The two companies hope to complete the deal by the end of the year. Marvel's chief executive, Ike Perlmutter, will be the largest personal winner, scooping $1.4bn in cash and Disney shares in return for his 37% stake in the business.

Marvel's chairman, Mort Handel, described Disney as a "perfect home" for his company's library of characters. "Both companies have their roots in great storytelling and innovative artistry," he said.

Marvel had sales of $676m last year but employed just 300 people. Disney, in contrast, had a turnover of $37.8bn and a payroll of 150,000 staff at businesses varying from its Hollywood film studios to ABC television, theme parks on three continents and a high-street chain of Disney merchandise stores.

"This helps give Disney more important exposure to the young male demographic that they have sort of lost some ground with in recent years," said David Joyce, a media analyst at stockbroker Miller Tabak.

He added: "When you look at the kind of TV shows on their cable networks, and the Disney consumer products line for the princess and fairies the Hannah Montana kind of stuff it shows that they have a lot of strength addressing the young female demographic."

In a research note, Citigroup analyst Jason Bazinet said: "Disney will also be able to monetise Marvel's brands across its entire ecosystem from TV to parks, movies, consumer products and video games."

Marvel's shares shot up by 26% to $48.78 during early trading on Wall Street. The buyout values Marvel at $50 per share.

Both companies have approved the deal, though it still has to clear the Hart-Scott-Rodino Antitrust Improvements Act and various regulatory committees before it can be finalized. Once finalized, Marvel's Perlmutter will continue to oversee Marvel's properties, working with Disney to help integrate the two properties across multiple lines of business.

We're staying on top of the situation, with calls out to Disney, Marvel, Activision, THQ, and Sega for comment on what effects this move will have on Marvel-based video game properties.




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