Does Disney Buy Pixar?

<TABLE cellSpacing=0 cellPadding=2 width="100%" bgColor=white border=0 xmlns:js="http://www.markewatch.com/xsl" xmlns:msxsl="urn:schemas-microsoft-com:xslt"><TBODY><TR><TD width="100%" colSpan=2>Pixar shares spike on deal talk
But no news emerges on animator's movie distribution


</TD></TR><TR><TD width="100%" colSpan=2><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD vAlign=top><TABLE width="100%"><TBODY><TR><TD vAlign=top>By Russ Britt, MarketWatch
Last Update: 7:39 PM ET Jan. 4, 2006


</TD></TR></TBODY></TABLE></TD><TD noWrap align=right width=400></TD></TR></TBODY></TABLE></TD></TR><TR><TD width="100%">LOS ANGELES (MarketWatch) -- Speculation of a possible distribution deal or perhaps even a buyout drove shares of Pixar up nearly 8% in late-session trading Wednesday, analysts said.



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Pixar surged in above-average volume of more than 3 million shares during the last 45 minutes of the regular session, leading to speculation that the animation studio might be close to forging a deal to distribute its feature films. There also was some suspicion that a buyout was in the works.


Steve Jobs, Pixar's chief executive, had said in recent months that he wanted to have a distribution deal in place by the end of 2005, but has yet to make an announcement.

"It would not surprise me if there were a deal, either way," said Dennis McAlpine of McAlpine Associates.

All signs pointed toward Walt Disney Co., which fell more than 1.5%, also on strong volume in the session's last 45 minutes. Disney has been Pixar's distribution partner from the beginning when the companies jointly released "Toy Story" in 1995.


Their relationship cooled, however, leading Jobs to end his pact with the company. Yet the departure of Disney Chief Executive Michael Eisner gave Jobs reason to pause, as successor Robert Iger seems to have mended fences with Pixar.

Disney executives said they had no news to report on the Pixar arrangement. Representatives at Emeryville, Calif.-based Pixar did not return phone calls.

While analysts indicated that Pixar's stock movement could be a sign of a deal, at least one company watcher said that he was puzzled by it.

"It was unusual activity on no information that was public," said Robert Routh of Jefferies & Co. "Based on all the information we have, [it was] unjustified."

Routh added that it's been clear for some time that Pixar would make a distribution deal with Disney or another partner, so an 8% jump wouldn't make sense. Only a buyout or more drastic action would account for the movement.

But Pixar likely would be reluctant to sell out, given that it now has $1 billion in cash and could have complete control over whatever product it wants to make, the analyst said. The asking price to give that up might be too high for Disney to absorb, Routh said.

Pixar's stock jump may have provided a ripple effect for DreamWorks Animation , which jumped 3%, also in the same time frame.

Stevie Wonder could have seen this coming :lol:

speck76 said:

Stevie Wonder could have seen this coming :lol:

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Blind Melon Chitlin told me the story...

Would be nice if there was infact a buyout in the works....interesting.

objr said:

Would be nice if there was infact a buyout in the works....interesting.

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You thinks so?

I think it would be better to keep them independent. So far the Pixar movies have been great. Why muck that up with Disney management? :lol:

wannab@dis said:

You thinks so?

I think it would be better to keep them independent. So far the Pixar movies have been great. Why muck that up with Disney management? :lol:

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They could keep the people there....you know keep the core creatives there...and not micro-manage...I don't see why it would be a bad thing. If anything, Pixar could focus on all the CG films and Disney could bring back quality 2D. Taking control of Pixar at this point is a good thing, because they take complete control over the library and rights for everything already released and all the future project currently in the works.

Is Disney's Animation Studio a separate company under the WDC umbrella? If so, maybe that will merge with Pixar and there won't be a buyout just a merge of some kind....

wannab@dis said:

You thinks so? I think it would be better to keep them independent. So far the Pixar movies have been great. Why muck that up with Disney management? :lol:

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I absolutely agree. Disney would be incredibly dumb to buy them completely out. Pixar is a great company that would be destroyed if Disney bought it. I definitely do not see this happening. However, I do see them buying a minority stake in the company. This is a possibility that might happen. This will give Disney some ownership but not enough control to screw things up.

Good points! The micro-managing of the movies under development was a big issue. That was one of my biggest beefs with Eisner. They needed to let the creative dept get back to their "roots". (EDIT: by roots, I don't mean just traditional animation, but the days of the great stories. Some of that got lost in the mindset to get new movies out as fast as possible. Whether 2D or 3D, a good story will always win.)

Bringing Pixar into the mix might help them accomplish that goal and would also bring in some good creative minds that could help on the 2D project story lines.

At the price it would cost Disney to buy out Pixar it is simply just not worth it at this moment. What would they be paying for? They already own the rights to the films that have been released along with any sequels. There is no guarantee that any future films will be huge hits. The corporate structure at Pixar which makes it such a great company would be lost. Basically they would be paying for the pixar employees. However, the majority of them are ex-Disney employees already. They already left Disney once. There is no guarantee these people would stay if Disney bought pixar. More than likely a bidding war would start with all of the best pixar employees between all of the new animation studios that have sprung up recently. Pixar is so great because Steve Jobs gives the control to the animators and story tellers. This has never really been the case at Disney. It is a completely different corporate culture. Even when Walt Disney was running the company he was heavily involved in the animation process. Thankfully he himself was a master storyteller. However this has not been the case with future CEOs and presidents of Disney. For better or for worse they have been heavily involved as well. The corporate cultures are just too different at this time to simply merge the companies. It just wouldn't work in the long term. Disney would simply be adding more payroll to their animation division and the magic of Pixar would be gone. This is not the quick fix Disney animation is looking for. It would be a costly mistake.

Pixar Picture Still Hazy
By Sandy Brown
TheStreet.com Staff Reporter
[FONT=arial, helvetica]1/5/2006 11:47 AM EST[/FONT]
[FONT=arial, helvetica]URL: http://www.thestreet.com/stocks/media/10260299.html[/FONT]


Pixar (PIXR:Nasdaq) shares pulled back Thursday as Wall Street continued to await news of a rumored deal.


Shares in Steve Jobs' cartoon juggernaut fell 3% in midday trading, partly reversing their sharp rise late Wednesday amid talk of a tie-up with partner Disney (DIS:NYSE) . Credit Suisse First Boston analyst William Drewry helped to douse that fire with a Thursday morning downgrade based mostly on the stock's heady valuation.


Pixar had risen 8% in the last hour of trading Wednesday as investors heeded an unconfirmed rumor that Disney would either buy the company outright or renew a lucrative distribution deal on favorable terms. Disney, which had fallen 2% late Wednesday amid the merger rumors, recovered Thursday morning to trade up 2%. The companies haven't had anything to say on the subject so far.


Pixar, the producer of Finding Nemo and The Incredibles, has a perfect record of producing hit releases. But its crucial distribution agreement with Disney comes to an end after the release of its next major enterprise, Cars, scheduled for release this spring.


Investors are waiting with bated breath to see whether the arrangement can be salvaged. Pixar chief Steve Jobs and former Disney honcho Michael Eisner had a contentious relationship. But while a renewed deal seemed unlikely in the past, signals from new Disney chief Robert Iger and Jobs recently suggest that there is a better relationship and that a deal may be in the works.


Jobs said last year that he wanted to find a new distribution partner by the end of last year, adding to speculation that a deal was imminent. Further fueling Wednesday's Pixar feeding frenzy was Disney's remark earlier this week that it would back Jobs' other focal product, the Apple (AAPL:Nasdaq) video iPod, with further content from its ABC and ESPN network stables.


Drewry, who downgraded Pixar to neutral from outperform but maintained his target price of $55, cites Pixar's recent surge for his pullback. "Pixar has had a major run recently. Since Oct. 7, the stock has increased 31%," outperforming the S&P by 24 points, he writes. "The stock price is now anticipating not only excellent fundamentals, but possibly a takeout as well."


On the subject of an announcement of a new distribution deal with Disney, Drewry says it is "overdue." Drewry believes a new deal would be favorable to Pixar with a distribution fee in the 8% industry-standard range, but that the new deal is already fully discounted in the stock price.
On Thursday, Pixar slid $1.77 to $56.39 and Disney rose 58 cents to $24.57.

Disney rumored to be buying Pixar

Adrienne Sanders
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Pixar Animation Studios, creator of "The Incredibles," and The Walt Disney Co. are rumored to be on the verge of a deal -- either a new distribution pact between the longtime partners or the possible sale of Pixar to Disney.

Pixar CEO Steve Jobs and Disney CEO Robert Iger have been in talks to prolong their long-term distribution agreement, which ends with this summer's release of the movie "Cars."

According to the Los Angeles Times, two sources close to the deal said ongoing talks have been turning to Disney acquiring all or part of Emeryville-based Pixar. In that case, Jobs, also CEO of Apple Computer, would become a major Disney shareholder and possibly the company's chairman.

Disney and Pixar have no official comment.

Disney has been struggling to regain its crown as animation king, as Pixar has enjoyed a perfect record of six straight blockbusters, including "Finding Nemo" and "Monsters Inc."

Under their soon-to-expire deal, Pixar produces the movies and Disney markets and distributes them worldwide for a fee. The two companies split all costs and profits. As Pixar's success has grown, Jobs has said he wants a deal with Disney or another studio that would allow Pixar to keep the profits from its films while paying its partner a distribution fee only.

Past talks between Pixar and Disney fell apart in January 2004 due to friction between Jobs and Disney's then-CEO Michael Eisner. Iger, Disney's new CEO, has been courting Pixar for a new distribution deal since being tapped as successor last spring.

Analysts are questioning whether a full acquisition of Pixar would be a good move, even for a media conglomerate the size of Disney. Pixar's market value is nearly $7 billion and Disney would likely pay a premium for the company.

"Even under optimistic assumptions, the deal would likely be dilutive to Disney for the foreseeable future," wrote Michael Savner, Bank of America Securities analyst in a report on Thursday.

Savner added other doubts about the rumored deal, "We also expect that there could be integration/cultural issues," he wrote. "Arguably, what has made Pixar so successful is its independent culture and its singular focus on quality. The obvious risk to an acquisition is that both are sacrificed."

Some analysts have speculated that selling Pixar would allow Jobs to focus on running Apple Computer Inc., which is enjoying the popularity of its iPod products. But others doubt that Jobs would be willing to sell off even part of Pixar, which he bought in 1986 from George Lucas for $10 million. Jobs and Pixar's creative director, John Lasseter, a former Disney animator, established a independent and creative culture that draws in artists from around the world.
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Woody13 said:

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"According to the Los Angeles Times, two sources close to the deal said ongoing talks have been turning to Disney acquiring all or part of Emeryville-based Pixar. In that case, Jobs, also CEO of Apple Computer, would become a major Disney shareholder and possibly the company's chairman."
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:dazzle:

This gets more interesting everyday....

You know... I just can't see Disney buying Pixar. In a way, Pixar is what Disney once was - focused on animation and quality, not quantity. Not to say that Disney doesn't do that at all anymore, but I feel they are nowhere near the quality they once were. I just don't think Jobs has the ego to be bought out - this is his baby, just like Apple was/is, and I don't think he's going to let history repeat itself (Apple falls on hard times after he was ousted).

[FONT=Arial,Helvetica]SEATTLE POST-INTELLIGENCER[/FONT]
http://seattlepi.nwsource.com/business/1310AP_Disney_Pixar.html
Tuesday, January 10, 2006 · Last updated 3:17 p.m. PT
Analysts: Disney deal with Pixar likely
By GARY GENTILE
AP BUSINESS WRITER

<!--BEGIN ARTICLE-->LOS ANGELES -- The more time that passes without a new distribution deal between The Walt Disney Co. and Pixar Animation Studios, the greater the speculation, including a theory that Disney is angling to buy Pixar and install its chief executive, Steve Jobs, as Disney's chairman.

Analysts believe a new distribution deal is likely - and soon. But they dismiss the notion that Disney would buy Pixar. An outright purchase would be too expensive, analysts say, and would not be wise for either company in the long term.

"I think it's absurd," said David Miller, an analyst with Sanders Morris Harris. "It would have to be an enormously compelling offer to even have Mr. Jobs stop and consider it for maybe more than five seconds."

Still, guessing the terms of a deal has become a bit of a sport on Wall Street, with speculation pushing Pixar shares higher in recent days.

Most analysts who cover both companies believe Pixar will soon announce a new deal that has Disney distributing its highly popular - and profitable - animated films. It's current agreement with Disney expires later this year when Pixar delivers its latest film, "Cars."

During an earnings conference call last November, Jobs said of Disney: "We will know if we are going to continue our relationship with them by the end of this year."

That target date has come and gone with no elaboration from either side on the status of the talks, thus fueling the current rumors.

Renewed speculation about a deal helped drive up shares of Pixar nearly 8 percent to $58.16 last Wednesday. Another possible trigger for the sudden jump was the expansion of an earlier deal between Disney and Jobs' other company, Apple Computer Inc., to provide more entertainment for download on Apple's iPod.

Shares dropped back to $56 the next day and have been trading around that price since. Shares fell 37 cents to $56.04 at the end of regular trading Tuesday on the Nasdaq Stock Market.

"Something has to happen soon," Marla Backer, an analyst at Research Associates Llc, wrote in a recent report.

The current Disney-Pixar deal expires with the June 9 release of "Cars." Marketing plans for Pixar's 2007 release, tentatively titled "Ratatouille," must be made soon.

"We continue to believe that a deal gets done with Disney that offers Pixar better economics and greater control of its characters," Backer wrote.

The most likely reason for the delay is that a new deal with Disney is complex, despite the mutual respect that has developed between Jobs and Disney CEO Robert Iger. Animosity between Jobs and former Disney CEO Michael Eisner led to the two sides breaking off talks in 2004.

"There are a lot of moving parts here," Miller said. "It's not as simple as slapping together an extension of the current agreement."

Under the existing deal, Disney co-finances each of Pixar's productions, and the two companies split the profits evenly after Disney takes a distribution fee. The two companies also share ownership of the films, and Disney has the right to make sequels on its own if Pixar refuses to participate.

That has led to some conflict, especially over Disney's announced plans to produce "Toy Story 3."

Pixar has said it wants to own 100 percent of its own films after "Cars" and wants to pay a straight distribution fee, without splitting any profits - an arrangement similar to the one George Lucas had with Twentieth Century Fox for his "Star Wars" films.

Pixar has more than $1 billion in cash, enough to finance its own films.

Analysts believe Pixar also wants to regain control of its film library from Disney and might also be pushing to keep more of the profits from "Cars" than the current deal allows.

Perhaps the most intriguing bit of speculation is that Disney will buy Pixar and make Jobs its chairman.

Not likely, several analysts say.

"We reaffirm our view that a Pixar acquisition by Disney makes no sense," Doug Mitchelson, an analyst with Deutsche Bank Securities Inc. wrote last month.

Disney would have to pay a hefty premium for Pixar, anywhere from $70 per share, or $8.4 billion, to $100 per share, or $12 billion, analysts believe.

Such a large deal would depress Disney's stock, saddling it with enormous debt and lowering its earnings, some analysts have said.

Jobs owns 50 percent of Pixar stock and would stand to make a fortune if he sells.

But Miller believes something more than money drives Jobs.

"He looks at Pixar like you and I look at our children," Miller said. "Our children aren't for sale."
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Something more than distribution deal will happen....there has to be something more in the works...if not the announcement would've been made before the year ended.

objr said:

Something more than distribution deal will happen....there has to be something more in the works...if not the announcement would've been made before the year ended.

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I suspect that you are right.

Disney, Pixar rumors abound in Hollywood

With the end of the current Pixar-Disney distribution agreement nearing and the series of moves by Pixar to jockey for more leverage, rumors are flying that Apple CEO Steve Jobs could be the next chairman of Walt Disney. The 14-year deal ends this summer after the release of Pixar's Cars animated film, and re-negotiation talks have spurred buy-out rumors.


With Jobs holding 50.6 percent of Pixar, he could sell the company if he wished, but will likely not sell Pixar given his current investment in Apple, attachment to Pixar, and the potential cost to Disney, opines BusinessWeek news analyst Ronald Grover.

"Buying Pixar would cost Disney a bundle, maybe $8 billion or $9 billion and could send Disney's stock into a tailspin. When the rumor first surfaced on Jan. 4, the share price promptly dropped 1.5 percent in the 45 minutes before the market closed that day." Disney and Pixar continue to hold talks, and a January 23 meeting is in place during which Disney will decide what sort of deal, if any, to make with Pixar. According to Grover, the talks will likely end in an extension and adjustment of the previous agreement, as Disney stands to gain from a relationship with Jobs-- Disney was the first to offer TV and other content for download via the iTunes video service.

Woody13 said:

Disney, Pixar rumors abound in Hollywood

With the end of the current Pixar-Disney distribution agreement nearing and the series of moves by Pixar to jockey for more leverage, rumors are flying that Apple CEO Steve Jobs could be the next chairman of Walt Disney. The 14-year deal ends this summer after the release of Pixar's Cars animated film, and re-negotiation talks have spurred buy-out rumors.


With Jobs holding 50.6 percent of Pixar, he could sell the company if he wished, but will likely not sell Pixar given his current investment in Apple, attachment to Pixar, and the potential cost to Disney, opines BusinessWeek news analyst Ronald Grover.

"Buying Pixar would cost Disney a bundle, maybe $8 billion or $9 billion and could send Disney's stock into a tailspin. When the rumor first surfaced on Jan. 4, the share price promptly dropped 1.5 percent in the 45 minutes before the market closed that day." Disney and Pixar continue to hold talks, and a January 23 meeting is in place during which Disney will decide what sort of deal, if any, to make with Pixar. According to Grover, the talks will likely end in an extension and adjustment of the previous agreement, as Disney stands to gain from a relationship with Jobs-- Disney was the first to offer TV and other content for download via the iTunes video service.

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So it seems we now have a day to look forward to....thanks for the heads up Woody.

Well I guess it's less of a rumor now, and more fact.....

Monster Inc.: Disney mulls buying Pixar
Report: If deal is successful, Steve Jobs would become biggest individual Disney shareholder.
January 19, 2006: 6:58 AM EST

NEW YORK (Reuters) - Walt Disney Co. is in serious talks about an acquisition of Pixar Animation Studios, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

The newspaper report said terms under discussion would have Disney pay a small premium to Pixar's current value of $6.7 billion. The deal would be a stock transaction and make Pixar Chief Executive Officer Steve Jobs the biggest individual shareholder in Disney, the newspaper reported.

The talks are at a sensitive stage and other options are possible, including an agreement for Disney to distribute Pixar movies, the report said, citing people familiar with the situation. The companies have been partners since Pixar began making feature films with "Toy Story." Currently Pixar and Disney split costs, and Disney effectively has sequel rights to Pixar films.
Representatives for Disney and Pixar could not immediately be reached for comment.

And another....


UPDATE: Disney Reported In Talks To Buy Pixar Animation Studios

19 Jan 05 05:25
By Dow Jones

LONDON (Dow Jones) -- Walt Disney Co. is reported to be in serious talks to buy Pixar Animation Studios for slightly more than the $6.7 billion that Pixar already is worth.

The deal between Walt Disney Co.(DIS)and Pixar Animation Studios(PIXR)would leave Pixar CEO Steve Jobs as Disney's largest individual stockholder, The Wall Street Journal reported Thursday, citing anonymous sources.

Jobs also is head of Apple Computer(AAPL).

The report said Disney is negotiating to pay a "nominal" premium to Pixar' current $6.7 billion market capitalization.

Both sides accept that Pixar's stock price has a takeover premium built in after weeks of speculation that Disney might try to take a stake in the company, or buy it outright, the report said.

However, the companies are still haggling over a final price, and any sharp moves in Pixar's share price could easily push the negotiations off course, the report said.

Disney has distributed and co-financed popular Pixar movies including "Toy Story" and "The Incredibles."

Disney, a component of the Dow Jones Industrial Average, closed Wednesday at $ 25.22 a share. Pixar closed Wednesday at $57.25.