Since 1986 Disney and Pixar collaborated several years on different animation movie
projects. The first feature film agreement in 1991 was in total favour for Disney. They
agreed to produce three full-length 3D CG animation movies. Disney assumed the
expenses of production and owned the movie rights, whereas Pixar received a
participation fee of the revenue. At this time Pixar was glad to participate in a
partnership and called it going to Disney University. In 1997 the co-production
agreement was a more mutual business partnership. Disney bought 5% of Pixar and
thus tied Pixar to a 10-year business deal. Steve Jobs, CEO of Pixar, was eager to
negotiate new conditions for Pixar in ...view middle of the document...
Therefore, Disney could also see
Pixar as threat in the movie industry. Another interesting factor is the highly talented
employee pool of Pixar, which is also a valuable soft asset to the success. The synergy
effects of an acquisition are also beneficial for Pixar in matter of financial resources and
human capital (reference: Handelsblatt, article: “Werben für die Börsenhochzeit). An
ownership is necessary in order to combine the interest of both companies.
On one hand, the acquisition with Pixar would gain Disney a permanent access to the
innovative technology. On the other hand, the merger would increase Disney´s market
power and even position the company ahead of the other competitors as well as raising
their profit tremendously (reference: Handelsblatt, article “Eine Million Zimmer”). Disney
should pursue an acquisition with Pixar, whereat the price of $7 billions ($5,9 billion
market capitalization) would be a faire value for such a successful company.
2.) What alternative strategies could Pixar and Disney pursue to generate similar value?
In the process of acquiring another firm different aspects need to be considered first.
Primarily, uncertainties such as financial risks, the alleged advantages of the firms and
the corporate culture of the companies must be exposed. Secondly, strategically
alternatives need to be analysed before making a huge business step.
Alternative 1: Disney creates a strategic alliance with another competitor.
In favour for this option is the fact of building new collaboration with a...