Mergers and Acquisition

939 Words Jun 12th, 2015 4 Pages
Currently, in the world of growing economy and globalization, many businesses on both domestic and international marketplaces struggle to achieve the best market share. Every day business people from top to lower management work to achieve a common goal, being the best at what you do, and getting there as fast as possible. As companies work hard to beat their competitors they accept many tactics to do so. As for my assignment, I have chosen to examine why Disney and Pixar merged as a company. A brief definition of an Acquisition and a merger will be given following with the difference between them. I will be discussing if these two companies were a success or a failure and why and which were their reasons behind this statement.

A
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•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.

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 a market and home entertainment.

On January 24, 2006, Pixar Animation Studios and The Walt Disney Company entered into a merger agreement. 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). The transaction would project 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.

The Disney Pixar merger represents a great example of how necessary synergies should be created for success through the right process, even though the two companies had a very different culture. Pixar was a relatively smaller organization with an open culture. Disney on the other hand was a huge corporation, which followed a hierarchical management structure.

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