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Disney to buy Marvel Entertainment

An actor wears a Spider-Man costume on the Hollywood Walk of Fame in Los Angeles, California, on Monday. Walt Disney has agreed to buy Marvel Entertainment for about US$4 billion in a stock and cash transaction, gaining comic book characters including Iron Man, Spider-Man and Captain America. PHOTO: BLOOMBERG

Move over Mickey Mouse, the X-Men are moving in.

The Walt Disney Co announced on Monday it had agreed to add the X-Men, Iron Man and Spider-Man to its vast cast of characters with a surprise agreement to buy Marvel Entertainment Inc for some US$4 billion.

The deal, Disney’s biggest since its acquisition of animation house Pixar three years ago, will combine the comic book giant and its huge stable of action heroes with the Disney entertainment empire.

“Adding Marvel to Disney’s unique portfolio of brands provides significant opportunities for long-term growth and value creation,” Disney president and chief executive Robert Iger said.

“We are pleased to bring this talent and these great assets to Disney,” Iger said.

Disney and Marvel, in a joint statement, said that Marvel shareholders would receive a total of US$30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.

It said that based on the closing price of Disney stock on Friday, the transaction value is US$50 per Marvel share, or approximately US$4 billion.

Shares of Marvel soared 25.15 percent in New York to close at US$48.37. Disney shares shed 2.98 percent to close at US$26.04.

The deal, which caught analysts and the market by surprise, was announced shortly before the opening bell on Wall Street.

Besides Spider-Man, Iron Man and the X-Men, Marvel’s cast of more than 5,000 characters includes Captain America, the Fantastic Four and Thor.

Marvel chief executive Ike Perlmutter said Disney is “the perfect home for Marvel’s fantastic library of characters given its proven ability to expand content creation and licensing businesses.”

“This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney’s tremendous global organization and infrastructure around the world,” he said.

Disney and Marvel said Perlmutter would continue to oversee the Marvel properties, which include Marvel Studios, Marvel Animation and Marvel Comics.

Perlmutter will “work directly with Disney’s global lines of business to build and further integrate Marvel’s properties,” their joint statement said.

Disney and Marvel said the boards of directors of both companies have approved the transaction but it still needs the green light from US anti-trust authorities and Marvel shareholders.

Iger said the companies hope to conclude the deal by the end of the year.

He compared the purchase of Marvel to Disney’s 2006 acquisition of Pixar Animation for US$7.4 billion, saying it presents “similar opportunities.”

Pixar is the San Francisco-area studio behind such hits such as Toy Story, A Bug’s Life, Finding Nemo, Ratatouille, WALL-E and Up.

The agreement drew a thumbs-up from most analysts.

“Strategically, we view Marvel as a good fit for Disney,” said Hale Holden of Barclays Capital. “We expect Disney to drive synergies across the Marvel characters at its parks and cable networks.”

But Standard and Poor’s said it was putting Disney’s long-term “A” corporate credit rating and short-term “A-1” rating on credit watch with negative implications.

“In our view, Disney may need to issue debt to supplement its cash for this transaction,” the ratings company said.

Marvel is celebrating its 70th anniversary this year. It was founded in 1939 as comic book publisher Timely Comics.

In addition to comics, Marvel characters also feature in movies, animated features, videogames and toys such as action figures.
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