Marvel holds intellectual property rights to a slew of comic book characters, such as Spider-Man, Iron Man, the Fantastic Four, and X-Men. Marvel licenses such characters to manufacture toys and produces its own movies which have been blockbuster hits.
The move immediately boosts Disney’s sagging DVD sales. Marvel’s business model fits in nicely with Disney’s—both companies leverage their popular characters to sell toys, licensing, apparel, and other products.
Last year, Marvel generated net income of $205 million on revenues of $676 million. Share of Marvel (NYSE: MVL) increased more than 25 percent to close near $50, the assumed purchase price of the company.
The terms of the agreement were based on last Friday’s closing price of stock. Current Marvel shareholders would receive $30 per Marvel share in addition to 0.745 Disney shares.
The deal immediately increases Disney’s brand portfolio—the company owns rights to more than 5,000 Marvel characters in addition to Marvel Studios, which produces films based on its comic characters such as the hit 2008 film “Iron Man.”
The acquisition is Disney’s largest since it acquired Pixar Animation Studios in 2006 for more than $7 billion.
Marvel provides Disney with a host of characters that appeal to younger men, and should compliment Disney’s host of characters popular to females, such as Mickey Mouse, Hannah Montana, and the Jonas Brothers. In addition, with Pixar already in the fold, Disney solidifies its position as the world’s largest animation film producer.
“They’re not bulletproof,” said Disney CEO Rogbert Iger on a conference call Monday, referring to Marvel’s business. “They are not immune from the changes that we’re seeing, but they have established a footing that we think is more solid than what you typically see in the nonbranded non-character driven movie,”
Marvel’s roots could be traced back to 1939, when Martin Goodman founded Marvel Comics. Marvel became a public company after an IPO in 1991.
Like Pixar, Disney is intending to run Marvel as a separate entity. “The goal here is not to rebrand Marvel as Disney,” Iger said on the call.
After the announced transaction, Moody’s Investor Service, a leading credit ratings agency, affirmed Disney’s A2 credit rating but cautioned that Disney’s acquisition comes at a time of economic strife within the industry and is inconsistent with the conservative spending of its peers in the media and entertainment industry.
“The acquisition will strengthen a weak spot in Disney’s demographic target categories, which is the tween male through young adult male age categories, and allow it to leverage the Marvel brand across its TV networks and licensing divisions,” said Neil Begley, a Senior Vice President at Moody’s, in a statement. “We do however recognize that Marvel’s performance and contribution will be highly dependent on its film slate which has and will continue to produce rather volatile operating results.”
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