Pixar Merger Analysis

Investment Banking Report
“Mergers and Acquisitions”

Student Names and Numbers
Despo Michaelidou -
Ioanna Panayiotou -
Mikaella Savva - 20140213
Katerina….
Svetlana….

Introduction
Back in 2006, a merger & acquisition agreement between two well-known companies set the basis for the continuation of the evolution in the animation industry. Being partners for more than a decade, Disney and Pixar eventually merged, after a number of unsuccessful attempts. Knowledge and experience of Disney, combined with the talent and know-how of Pixar, were factors which could not be ignored by either party.
It is interesting to have a better look in this agreement, by understanding the rationale behind it and by examining the financial aspects

Seven years later, in 1986, Steve Jobs became the company’s majority shareholder and he renamed the name to “Pixar”.
The studio of Pixar is responsible for a number of big successes in the industry of animation. Steve Jobs invested in the talent and technology, two factors which were crucial for the success of the company. Its success is also shown from the number of awards obtained until today.
Since 1995, the studio has produced 14 feature films, the majority of which were successful financially making more than $8,6 billion worldwide, and also have obtained good critics from knowledgeable individuals. Especially 13 films are within the 50 animated films with the highest gross income.
The studio eventually made an IPO in November 1995 in NASDAQ, with 6,9 million shares. The initial price at which the shares were offered was $12 to $14, however they were shot at much higher prices, from $22 to $45. The price was eventually set at $39 before closing the day.
The Partnership

o New Heroes would be created for the Disney Theme Parks so merchandise sales would increase. • Financial Motives: o The most important motive of course for every Acquisition or Merge is the expected Increase in profits. No Company is willing to loose its independency and the power of doing whatever they want if there is not a financial motive behind it. In our case it was expected that after the announcement Disney΄s Shares would temporarily drop but after a while stock price was expected to increase substantially. o Pixar΄s shareholders on the other hand would benefit in both ways:
 First at the time of the acquisition since according to the deal For every Pixar share at a price of $57.57 at the time of acquisition) hey would get 2.3 Disney Shares at a closing Disney share of $25.99 . In this way they would have an instant profit of 4%.
 Then since they were going to be Disney shareholders after that they would benefit from all expected earnings as mentioned