Disney And Pixar Merger Analysis

History of the Merger

Walt Disney Company had been working with animation partner, Pixar since 1991 for production and distribution of animated films. In May 1991, Disney entered into an agreement with Pixar for developing and producing three computer animated feature films. According to the agreement, Disney agreed to produce movies to be developed and directed by Pixar's John Lasseter. Disney agreed to market and distribute these movies. Pixar was to be compensated based on the revenue obtained from distributing these films and related products. Including distribution fees, Disney was to get 87% of the distribution proceeds. The first film they released together was Toy Story which was released in November 1995. The film was a hugely successful

In the US$ 7.4 billion deal, Disney got a library of six Pixar films. Through the merger, Disney would own the world's foremost computer animation studio and its enormous talent pool, while Pixar would have access to Disney's extensive marketing abilities. Disney's press release said, "This acquisition combines Pixar's preeminent creative and technological resources with Disney's unparalleled portfolio of world-class family entertainment, characters, theme parks and other franchises, resulting in vast potential for new landmark creative output and technological innovation that can fuel future growth across Disney's

This ensure that the talent purchased was not wasted at any point. In this case, Pixar was given the responsibility of turning around a storied animation departments that was having trouble keeping up with changing responsibilities.

• The key lead management were given additional responsibilities within Disney. This helped ensure that they would not leave post the acquisition. Pixar is nothing but an incredibly expensive computer without the talent that runs it. Had the lead talent walked out, most of the animators in Pixar would have walked too.
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Lesson Learnt

1) Culture differences can make or break mergers and acquisitions: Pixar and Disney have a vastly different culture. This could have become the reason for this acquisition's failure. Disney could have acted like a pompous owner and demanded Pixar give up its culture and adapt to that of Disney. Instead it ensured the essence of Pixar which made the company so successful was well preserved. Conversely, Pixar could have acted like a spoilt brat, incapable of accepting it's new owner. Instead they accommodated Disney in their branding. The success of this merger lies in the fact that in a few years, Disney imbibed Pixar's brain storming culture while Pixar imbibed Disney's more strategic