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Disney to Buy Pixar for $7.4 billion

24 Jan, 2006 By: Holly J. Wagner

The Walt Disney Company has agreed to buy Pixar, which has produced its most successful animated films in recent years, in an all-stock transaction valued at $7.4 billion.

Pixar President Ed Catmull will be president of the combined Pixar and Disney Animation Studios and Pixar EVP and Toy Story creator John Lasseter will serve as chief creative officer. Pixar founder Steve Jobs will join Disney's board of directors and will become its largest individual investor, with about a 7 percent interest in the company.

Executives at a press conference announcing the deal gave little indication of what it means for DVD, but it was clear they are focused on downstream outlets for movies from the combined studios.

“You may watch your favorite live action film three or four times in your life. For a great animated film, your kids may watch it dozens of times or hundreds of times,” Jobs said.

Mobile entertainment has become a fact of life, he said, and “There is going to be demand to watch them many, many times in many, many places.”

Walt Disney Co. president and CEO Robert A. Iger, who has expressed interest in collapsing the DVD window, said, “The goal here, above all else, is to make great animated films; The rest of it takes care of itself.

“We're committed first to making great product, and secondly being very open to getting that product to people,” he said.

Both men lauded the potential for sequels to some of Pixar's most popular films, but would not announce a production slate.

With the addition of Jobs, 11 of Disney's 14 directors will be independent. Both Disney and Pixar animation units will retain their current operations and locations.

The deal gives Disney a wellspring of characters that can be expanded into merchandise and theme park attractions as well as film and DVD.

Lasseter will act as principal creative advisor at Walt Disney Imagineering, where he will provide his expertise in the design of new attractions for Disney theme parks around the world, reporting directly to Iger.

“For many of us at Pixar, it was the magic of Disney that influenced us to pursue our dreams of becoming animators, artists, storytellers and filmmakers,” he said. “For 20 years we have created our films in the manner inspired by Walt Disney and the great Disney animators -- great stories and characters in an environment made richer by technical advances.”

Disney first entered into a feature film agreement with Pixar in 1991, resulting in the release of Toy Story in November 1995. In 1997 the companies joined in a co-production agreement under which Pixar agreed to produce five original computer-animated feature films for distribution by Disney. Pixar is currently in production on Cars, the final film covered under that agreement, which hits theaters June 9.

“The addition of Pixar significantly enhances Disney animation, which is a critical creative engine for driving growth across our businesses. This investment significantly advances our strategic priorities, which include -- first and foremost -- delivering high-quality, compelling creative content to consumers, the application of new technology and global expansion to drive long-term shareholder value,” Iger said.

Under the agreement, 2.3 Disney shares will be issued for each Pixar share. The merger is subject to regulatory approvals.

Separately, Disney's board also increased to 225 million the amount of stock the company will repurchase, a move analysts often view as a vote of confidence that its value will increase.

Even sometime dissenter Roy Disney came out in support of the purchase.

“Animation has always been the heart and soul of the Walt Disney Co. and it is wonderful to see Bob Iger and the company embrace that heritage by bringing the outstanding animation talent of the Pixar team back into the fold,” he said. “This clearly solidifies the Walt Disney Company's position as the dominant leader in motion picture animation and we applaud and support Bob Iger's vision.”

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