A Disney-Pixar deal: Devil in the details
http://www.iht.com/articles/2006/01/24/business/disney.php
http://www.nytimes.com/2006/01/24/business/media/24disney.html
January 24, 2006
Disney Bid for Pixar Is Imminent
By LAURA M. HOLSON
and ANDREW ROSS SORKINLOS ANGELES, Jan. 23 - The Walt Disney Company is planning to announce as early as Tuesday the acquisition of Pixar Animation Studios in a stock transaction valued at about $7 billion, people briefed on the negotiations said Monday night.
Disney's board voted to give the chief executive, Robert A. Iger, the authority to offer the chief executive of Pixar, Steven P. Jobs, about $59 a share for the company, these people said. The price would be at a slight premium over Monday's closing of $58.27 a share, which gave Pixar a market value of about $6.93 billion.
Disney's negotiators were then expected to approach their counterparts at Pixar to reach a price, and Pixar's board could vote on the deal soon after that, these people said.
A Disney spokeswoman declined to comment; calls to Pixar were not returned.
All of the people briefed on the negotiations cautioned that the deal could fall apart at any time. "This is tricky," one said. "All of the things have to be just right."
Several crucial details were still being hammered out Monday, including the employment contracts for certain Pixar executives, among them John Lasseter, Pixar's chief creative officer and a former animator at Disney, one person said. He is expected to oversee the animation unit that would become part of Disney's filmed animation division.
The deal would combine Pixar with Disney's animation unit and give Mr. Jobs a seat on Disney's board.
Two years ago Disney and Pixar began renegotiating a distribution agreement that would have given Disney the right to distribute Pixar's films after the release of the forthcoming "Cars." (The two jointly produce Pixar movies although Disney owns the rights. The agreement ends after "Cars.")
At that time, as with these talks, price was an issue. In 2004, Mr. Jobs was demanding that Disney share rights to the movies that Pixar had yet to make, including "The Incredibles," which was released in 2005, as well as "Cars." But Disney, which owned all of the rights to these movies, did not want to give them up.
Pixar, based in Emeryville, Calif., has grown to hundreds of employees from about 44 in 1986, two years after Mr. Jobs acquired the company from the director George Lucas for $10 million. Pixar and DreamWorks Animation have led the way in computer animation for films.
Last year, talks about renewing the distribution deal with Pixar arose again after Mr. Iger was named chief executive of Disney. Mr. Iger began thinking about the acquisition last fall when it became clear to him that distribution alone would not add much value to Disney over all, said a person who discussed the matter with the Disney chief.
Disney's own animation unit lagged behind its peers, and Mr. Iger made it a priority to improve its operation. Animation is essential to Disney's success because it provides the characters that drive the company's theme parks, consumer products and cable television programs. In recent years, Pixar has become a steady supplier of such characters.
Laura M. Holson reported from Los Angeles for this article and Andrew Ross Sorkin from New York.
