In what Walt Disney Co. President and CEO Robert Iger called “a great opportunity at the right time,” Disney is buying Marvel Entertainment Inc. in a $4 billion cash-and-stock deal, putting Spider-Man under the same umbrella as Mickey Mouse.
Under the terms of the deal, Marvel shareholders will receive $30 cash and 0.745 shares of Disney stock (NYSE: DIS) for every share of Marvel stock (NYSE: MVL) owned.
At closing, the amount of cash and stock might be adjusted such that the total value of the Disney stock issued is not less than 40 percent of the total merger consideration, based on its trading value at that time.
Both boards of directors have approved the deal, which is slated to close by the end of the year.
On a conference call with investors, Disney said that the deal will be accretive to earnings in two years.
Disney also said that the deal will result in the issuing of 59 million new shares, but Disney would enter a buyback program to repurchase the same amount of shares during the next 12 months, as to not dilute stockholder value.
The deal gives Disney ownership of Marvel’s portfolio of more than 5,000 characters, which include such iconic characters such as Spider-Man, The Incredible Hulk, the Fantastic Four and the X-Men, many of which have been turned into successful movie franchises in recent years.
Disney will continue to honor the distribution deals in place for Marvel films, such as Paramount Pictures’ deal for the “Iron Man” franchise, for the duration of the agreement.
“Our intention is to respect the deal in place,” Iger said in the conference call, saying it was not only “the right thing” to do but also the “right thing from a legal perspective.”
One distribution channel that will likely benefit in the short term is Disney’s new DisneyXD channel, which is focused on programming for boys ages 6-14. The channel already shows 20 hours of programming each week featuring Marvel characters.
One parallel that was brought up during the call was the 2006 deal that saw Disney buy Emeryville animation studio Pixar for $7.4 billion. Disney Chief Financial Officer Tom Staggs said on the call that the Pixar deal made Disney a better company and made Pixar a more attractive company as well.
Marvel Chief Executive Officer Ike Perlmutter will oversee the Marvel properties. Disney’s officers on the investor call reiterated that Disney is not looking to gut the company, or slap Disney’s name on Marvel’s products.
“The goal here is not to rebrand Marvel as Disney,” Iger said.
Perlmutter will bring in a handsome payday from the deal. According to Marvel’s last DEF 14A statement with the U.S. Securities and Exchange Commission, which was filed March 24, Perlmutter is Marvel’s largest shareholder, controlling more than 29 million shares, or 37.21 percent of the company, through direct ownership, stock options and trusts.
Perlmutter’s stake will bring in about $881 million in cash after the close of the deal, as well as 21.878 million shares of Disney stock, which based on Friday’s closing price of $26.84,
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