Contemporary Issue in Financial Management



Abstract

For the contemporary issue in financial management paper assignment I have chosen to research the recent acquisition of Lucasfilm Limited by the Walt Disney Company. The Walt Disney Company is the parent company of the famous Disney brand and Lucasfilm Ltd is the brain child of the accomplished Hollywood director/producer of such films as the Star Wars and Indiana Jones sagas. This acquisition on the surface seems to be a win-win situation for both entities. In this assignment, I intend to explore the overall financial management strategy that led The Walt Disney Company to decide to acquire Lucasfilm Ltd. Furthermore, I intend to research and provide information to the background of the acquisition as well as assess the potential financial impacts to the two companies along with the impacts such an acquisition may have on the two company's popular brands moving forward.

Table of Contents

Abstractii

Introduction1

Background & Significance2

Current Issues3

Discussion4

Management of Issues8

Recommendations8

References11

Contemporary Issue in Financial Management

Introduction

This research paper aims to study the concept and impacts of mergers & acquisitions. The company chosen is Walt Disney and its recent acquisition of Lucasfilm Limited. Both are the top companies. This research will not only include the acquisition impacts on both the above stated companies but also the current financial management issues faced in this acquisition. This is an integral part of the financial management course and will help me learn and gain some practical value and meaning of the concepts studied in the course.

The Walt Disney Company founded by Bob Iger, with its subsidiaries and associates is known to be a foremost and broader family amusement worldwide for more than nine decades. It started with its cartoon studio in the 1920. It is known as a media enterprise that has five different segments of business that is media association, parks & resorts, interactive media, studio amusement and consumer products. Walt Disney is a Dow Jones 30 company having revenues of $ 40 billion plus as recorded in the year 2011 (www.thewaltdisneycompany.com). Disney recorded its revenues of almost $ 41 million in October 2011 which is an increase of almost 7 % from 2010. The operating profit of the company also increased by 18 % almost in 2011 and net profit shows an increase of 21 % in 2011(biz.yahoo.com).

The Lucasfilm Ltd. was formed in the year 1971 by George Lucas. This company is known to be fully incorporated with entertainment. Its activities includes television productions, motion picture, industrial light & magic and sky-walker sound helping the digital requirements of the entertainment business whether its visual or audio. It has segments that are Lucas Arts, Lucas Animation and Lucas Online that generates substance for Lucasfilms on the internet. Lucasfilm Ltd. has its head quarters in California (www.lucasfilm.com).

Background & Significance

The Walt Disney acquired Lucasfilm for $ 4.5 billion and added to its stable investments. According to the merger agreement terms, Disney issued around 37 million shares and a cash payment of about $ 2.2 billion. The closing price of Disney's shares at that time ...