The Walt Disney Company, founded in 1923 by Walt and Roy Disney, is a leading media and entertainment corporation with ownership of theme parks and networks like ABC, initially known for animated films based on fairytales. The acquisition of Pixar in 2006 for $7.4 billion aimed to enhance Disney's animation capabilities while allowing Pixar to focus on its strengths amid competitive challenges. Both companies emphasize an innovative culture, with Disney referring to employees as 'cast members' and stressing collaboration, while Pixar values the well-being of its people and encourages creativity.

3. HISTORICAL BACKGROUND
The Walt Disney Company was founded on October 16th 1923 by brothers Walt
and Roy Disney.
It is one of the largest media and entertainment corporations in the world.
It’s the owner of 11 theme parks and several television networks, including the
American Broadcasting Company (ABC).
Disney started making films in the
1930’s.
Some of their first films were Snow
White, Bambi and Pinocchio.
A lot of their earlier films were
animated adaptations of children’s
fairytales.

4. BUSINESS STRATEGY BEHIND DISNEY'S MAGICAL
EXPERIENCES
• Leadership Excellence
According to the Disney Institute, the foundation for successful leaders is
successful leaders is communication. To foster an engaged and collaborative
and collaborative company culture, the leader must encourage the creativity
encourage the creativity of his/her employees and create an environment in
environment in which it is safe and comfortable for them to share those
share those ideas.

5. • Cast Excellence
Disney uses its own unique business language to set the right tone amongst
tone amongst those within the company. For example, rather than using the
than using the word “employees,” Disney uses “cast members”. Similarly,
Similarly, customers are referred to as “guests” and jobs are “roles”. Those
“roles”. Those who work at Disney dont wear a uniform; they don a “costume”.

7. Pixar, co-founded by Steve Jobs, left, and Disney, run by Robert A. Iger.

8. HISTORICAL BACKGROUND
Pixar Animation Studios was started by
John Lasseter & George Lucas
Pixar was initially a computer graphics
division owned by film maker George
Lucas known as Lucas film limited.
In 1986, Steve Jobs purchased the
computer graphics division of Lucas Film
Ltd. for $10 million and established it as
an independent company named Pixar ,
co-founded with Dr. Edwin E. Catmull.
On November 22, 1995, Pixar Animation
Studios forever impacted the future of
filmmaking with the release of its first
feature film, Toy Story. The film went on to
become the highest grossing film of 1995
with $362 million.

9. THE RATIONALE
DISNEY -
• The acquisition gave Disney ownership of the world’s most famous
computer animation studio and its talent.
• The timing was also perfect for Disney, as its own animation films
were failing.
• The deal brought the technology company Apple closer to Disney.
• The decrease in competition is another motive for Disney

10. PIXAR -
• For Pixar it was a good move to face competitors like
DreamWorks & 20th century fox.
• The deal gave Apple iTunes more video content to offer.
• Pixar can focus on its core strengths of producing the computer
animation and does not have to invest in production line for
making merchandise and home entertainment.

11. THE MERGER
Pursuant to the terms of the merger agreement, Lux Acquisition Corp., a
wholly-owned subsidiary of Disney, will merge with and into Pixar, and
Pixar will survive and continue as a wholly-owned subsidiary of Disney.
On January 24, 2006, Pixar Animation Studios and The Walt Disney
Company entered into a merger agreement. The deal was
consummated on May 5, 2006 for a purchase price of $7.4 billion.

12. 1. Pixar's major features have been made with Walt Disney
Pictures.
2. In 1997, after the release of Toy Story, a 10-year, 5-picture
deal was signed, evenly splitting production costs and
profits on subsequent movies. Disney alone retained
rights to the films and characters. In addition, Disney
collects 10 to 15 percent of each film's revenue as a
distribution fee.
3. Pixar and Disney have had ongoing disagreements since
the production of Toy Story 2 (1999). Originally intended as
a straight-to-video release (and thus not part of Pixar's
five picture deal), the film was upgraded to a theatrical
release during production. Pixar demanded that the film
then be counted toward the five picture agreement, but
Disney refused. There were talks of Pixar searching for

13. 4. On January 24, 2006, Disney announced that it
had agreed to buy Pixar for approximately $7.4
billion.
5. Disney was offering 2.3 shares of its stock for
each Pixar share. That's a 3.8% premium on
Pixar's closing price of $57.57 (2006).
6. The transaction would catapult Steve Jobs, who
was the majority shareholder of Pixar with 51%,
to Disney's largest individual shareholder with 7%
and a new seat on its board of directors.

14. To purchase Pixar, Disney exchanged 2.3 shares of its common stock
for each share of Pixar common stock, resulting in the issuance of
279 million shares of Disney and converted previously issued vested
and unvested Pixar equity based awards into approx. 45 million
Disney equity based awards.
The acquisition purchase price was $7.4 billion in an all-stock
deal.($6.4 billion of stock and Pixar’s cash & investments of approx.
$1.0 billion).
The value of the stock issued was calculated based on the market
value of the company’s common stock using the average stock price
for the five day period beginning two days before the acquisition
announcement date on Jan 24th, 2006.
The fair value of the vested equity based awards issued at the Closing
Date was estimated using the Black-Scholes option pricing model .
THE METHOD

15. BUSINESS STRATEGY BEHIND PIXAR
• Care about people first
Pixar had drifted into dangerous territory by putting the movie ahead of the well-being of
of the well-being of its people. The harm done to employees, and what could have
could have happened to the child, was a wake-up call that solidified Catmull’s core belief

16. • Focus on a purpose that makes people feel proud
Pixar’s purpose is to “make great films.” Its leaders are unambiguous about
about communicating this. Making great films is what attracts people to Pixar. It makes
to Pixar. It makes them feel proud and energizes them. It’s why they stay.

17. • Encourage self-expression and diversity of thought
In most companies the overwhelming majority of employees feel that senior management
senior management does not value their opinions and ideas. Not so at Pixar. Catmull