Mergers and Acquisitions: Disney and Pixar

Mergers and Acquisitions: Disney and Pixar

Introduction

Growth is one of the key goals that companies aim to achieve after profitability. Maintaining a steady growth cycle is essential for corporate companies in order to sustain a strong foothold in the market. In order to spread its wings further and reap the financial and non financial benefits of growing big, companies go for external growth strategies. Mergers and Consolidations are one key method that allows firms to grow externally.

Consolidation refers to two firms, generally of equal size and power, combining together to form a new company. The term 'merger' refers to the act of combining resources by two different companies in order to create bigger company where generally the acquiring firm retains the identity. This integration can be done on a vertical, horizontal or a lateral scale. The kind of integration method that the firm opts for decides the advantages that the firm is able to enjoy as a result of the integration (Gaughan, 1999). For the purpose of this paper, the focus will remain on horizontal integration, where two firms operating at the same stage of production and producing similar products combine together.

Purpose of Paper

The purpose of this paper is to discuss the merger of The Walt Disney Company and Pixar Animation Studios, and evaluate the impact of the merger on the overall position of the company. A comparative analysis has been carried out for the two companies before and after the merger took place in the context of the industry and the market in which they exist.

Company Overview

The Walt Disney Company

The history of The Walt Disney Company dates back to October 1923. The company, now popularly known as Disney, redefined animation and cartoon films and expanded into other divisions including motion pictures, television, music records, print media, online media and travel and leisure.

Headquartered in California, The Walt Disney Company has grown to become the largest media conglomerate in the world. The company's division includes giant business units including but not limited to ABC Television Network, Disney Channel Worldwide, ESPN Inc., Muppets Studio, Disney Theatrical Group, Radio Disney, Disney Consumer Products, UTV Software Communications, Disney Consumer Products, Disney Cruise Line, Disney Theme Parks, and Disney vacation resorts. Disney is a global brand and its strong brand equity has enabled the company to generate revenues from other Disney products that include toys, stationary, garments etc. The company's strong internationalization and utilization of interactive media has enabled it to achieve strong presence in Europe, South Asia and India among other countries.

Pixar Animation Studios

Pixar originally started in 1979 as The Graphics Group, which was a computer subdivision of Lucas Films, and was known for producing cutting edge graphical imagery and development and invention of high end animation tools, techniques and technologies. In 1986 the mind behind Apple Inc., purchased major stakes in the company and that was the time when Pixar Animation Studios was born. Pixar was initially established as an image hardware company and its primary clientele were government ...