Disney-Playdom deal

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A group presentation for a course Organizational Economics. The topic was Disney's acquisition of Playdom.

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Disney-Playdom deal

  1. 1. Nedko Duchev Petar Mihaylov Julius Valjakka
  2. 2. AGENDA <ul><li>Introduction of Companies </li></ul><ul><ul><li>Walt Disney Company </li></ul></ul><ul><ul><li>Playdom Inc. </li></ul></ul><ul><li>Analysis </li></ul><ul><ul><li>Overbidding </li></ul></ul><ul><ul><li>Diseconomies of Scale </li></ul></ul><ul><ul><li>General Merger Problems </li></ul></ul><ul><ul><li>External Factors </li></ul></ul><ul><li>Conclusion </li></ul>
  3. 3. <ul><li>July 27, 2010 … </li></ul>... THE WALT DISNEY COMPANY TO ACQUIRE LEADING SOCIAL GAME DEVELOPER PLAYDOM … ... Disney а greed to pay Playdom $563,2 million plus a performance – linked earn out of up to $200 million.
  4. 4. Introduction of Companies <ul><li>The Walt Disney Company </li></ul><ul><li>Founded in 1923 </li></ul><ul><li>Five segments </li></ul><ul><li>“ A related-business” </li></ul>
  5. 5. Introduction of Companies <ul><li>Playdom </li></ul><ul><li>Founded in 2008 </li></ul><ul><li>Simple online games provider </li></ul><ul><li>Number 3 on Facebook </li></ul>
  6. 6. Overbidding <ul><li>Acquisition price – up to $763,2 million </li></ul><ul><li>Enterprise value estimation – $322 - $377 million </li></ul>Playfish’s acquisition price – $400 million
  7. 7. Diseconomies of Scale <ul><li>“ Bigger isn’t always better” </li></ul><ul><li>Wage premium in larger firms </li></ul><ul><li>Costly internal systems </li></ul>
  8. 8. General Merger Problems <ul><li>Structural differences: </li></ul><ul><ul><li>culture, size, strategy </li></ul></ul><ul><li>Different target groups </li></ul><ul><li>Corporate Governance </li></ul>
  9. 9. External factors <ul><li>Power of social networking sites </li></ul><ul><li>Competitor threats (network effects) </li></ul>
  10. 10. Conclusion <ul><li>Acquisition is inefficient </li></ul><ul><li>Overvaluation of Playdom </li></ul><ul><li>Diseconomies of scale </li></ul><ul><li>General merger problems </li></ul><ul><li>Zynga’s sector dominance </li></ul>
  11. 11. <ul><li>THANKS FOR THE ATTENTION </li></ul>

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