Disney & Lucas Film

Table of Contents Executive Summary i Introduction 1 enquire constancy Analysis 1 Disney Industry Analysis 3 inquire Company Analysis 4 pulverisation Analysis 6 Valuation 6 Disney Company Analysis 7 Sh ar Price Analysis 10 Examination of the Premium 12 Takeover Overview, Methods and Tactics 14 Analyst, Media and Legal Reaction 16 pass and Conclusion 17 References 19 Appendices 22 , increased pressure from eBook instauration and internet piracy. As such, this exertion grew an estimated 2. 50% from 2008 to 2009 and maintained a deepen Annual Growth Rate (CAGR) of 5. 4% from 2000-2009 (Jackson, 2011). Licensing Marvels moment major unit of operation consist of its large licensing business. Marvel licenses the utilise of its various characters to gaming, flick, toy and television show producers alike. This foodstuff is primarily set by trademark and character licensing. As of 2007, Intellectual Property (IP) licensing represent a $USD 30 Billion market in the United State s (U. S. ) altogether (IBISWorld Licensing, 2012). IP licensing displayed constant harvest. However, in 2008 it incurred a slight contraction of 3. 4% due to the global financial crisis.As substantially, from 2000-2008 it had a CAGR of 5. 09%. Further, character and trademark licensing delineated more than 40. 0% of the total licensing market for 2012. The IP Licensing market is considered to be moderately aggregated with Disney acting as the attention leader (after its eruditeness of Marvel) with just over 10. 50% of market share (IBISWorld Licensing, 2012). However, the industry did exhibit lacklustre performance in 2009, (down almost 10. 00%) from its 2007 high. Film Production Marvels final major operational segment consists of its film product operations.Generally, the industry has consistently outperformed the market (CAGR 5. 80% from 2000-2009) and as of 2009 represented a $USD 118 Billion dollar market in the U. S. (Thomson ONE, 2012). The industry is highly unite w ith the net 10 studios (Disney being in second place), representing over 70. 00% of the market. (Nash, 2012). The ever-changing nature of consumer entertainment consumption is gradually eroding various industry segments such as DVD sales and DVD rentals. However, this has been compensated for by the adoption of other viewing alternatives like pay per view and localise broadcast television (Thomson ONE, 2012).Moreover, have managed to impose price increases on consumers. Thus, allowing them to progress to $USD 2. 5 Billion more in 2009 than in 2001 despite press down ticket sale volume for the same comparable period. (Nash, 2012). The film industry has also proven to be resistant to the economic downturns with moderate harvest-feast during the recessionary slumps of 2001, 2008 and 2009 (Thomson ONE, 2012). - Disney Industry Analysis Disney operates in two major segments licensing and entertainment. These segments are similar to the is Marvel operates in.However, Disney also inc orporates theme parks into its operations, thus differing from Marvel (Disney Financial Report, 2008). It should also be noted that Disney media services go well beyond simply producing childrens shows and films. They own several studios and until 2009 owned alphabet (Thomson ONE, 2012). It can be stated that, the two corporations with regards to their fictional character businesses, signal distinct node bases with respect to gender, but target similar customer bases with respect to age. Disney primarily targets oung children and puerile girls, whereas Marvel targets young adult males and teenage boys. Theme Parks Disney is the leader in the theme-park market with all of the perish 5 theme parks in the world belonging to this company. In 2009, although most theme parks experienced significant decreases in customer presence, Disney managed to actually increase attendance through appealing to local market and offering loyalty programs (AECOM, 2009). Over 185 Million people atten ded one of the top 25 theme parks in the world in 2009 (119 Million in the U. S).Attendance showed remarkable resilience in America with the top 20 parks in the U. S only losing a disunite of their attendance from their 2007 high, despite the financial crisis. (AECOM, 2009). The $USD 10. 70 Billion change significantly over the 3 year period. Net income quadrupled from 2006 to 2008 reaching an all clock time high of $USD 205 Million in 2008. Further, diluted earnings per share (EPS) crop exhibited similar performance, indicating no extraordinary abnormalities in executive compensation or share issuance (Marvel Annual Report, 2008).The company managed to decrease its total liabilities by over $90 Million from 2007 to 2008. As well, Marvel significantly bolstered its notes reserves from $USD 30 Million to $USD 105 Million. There was also a large increase in accounts receivable (A/R) from $USD 28. 70 Million in 2007 to over $USD 144 Million in 2008. However, given the fast growth of A/R and consistent inventory levels, this large increase warrants runty concern. As well goodwill, comprises over 30% of the corporations assets.It essential be noted that this goodwill was not accumulated via a pulsing acquiring strategy which was adopted by Tyco (Bruner, 2005). Thus, the goodwill was accumulated in a proper manner and not for the sole purpose of continually bolstering EPS and Price-to-Earnings ratios (Marvel Annual Report, 2008). Although the debt to equity (D/E) ratio is still moderately high (1. 36), the potent did manage to significantly decrease this ratio throughout the 2007-2008 period this was achieved by decreasing its liabilities and doubling its retained earnings.Moreover, an exorbitant $USD 251 Million cash expense for film inventory in 2007 contributed to the companys significant oppose cash flow for the year. if the premium paid is too high as Disney does not expect any cost-reduction or revenue-enhancement synergies from the spinal fusion (Bu siness Insider, 2009). Moreover, analysts see the erudition as a valuable opportunity for Disney to secure future gainful movies and contemplate the possible outcomes of movies based on Marvels characters feature with the animation resources of espoused by Disney and Pixar.Finally, Disneys previous acquisition of Pixar Animation studio apartment was incredibly fortunate, both in terms of revenue generation (each Pixar movie made post merger yielded large profits) and in terms of the desegregation of Pixar management into the Disney family (CNBC, 2009). By incorporating over 5,000 of Marvels characters into Disneys library, the media expects this merger to follow the same path and prove to be another successful acquisition story for Disney. Two days after the merger announcement, an individual blog speculated that security law had been infringed upon as a result of the deal.The hatch suggested that Marvels chief executive Mr. Perlmutter engaged in singular behaviour prior to t he merger. The blog stated that in February 2009, a confluence took place between the chairman of Marvels film naval division and Disneys CEO, where they discussed ways in which the relationship between the two companies could be extended. Two weeks following said meeting, Mr. Perlmutter was granted 514,354 options for Marvel shares with a regard price of $USD 25. 86 per share. Three weeks later, he was granted another 750,000 options at an exercise price of $USD 23. 5 per share. The representatives of the firms met again in the beginning of June and let on afterwards the possibility of a merger to the other managers (Wall Street Journal, folk 2009). In essence, the proximity of the dates in which Mr. Perlmutters was granted options renders the transaction shady . Although it is not unusual for Marvels employees to receive options as annual com addendum A VALUATION MODEL APPENDIX B wonderment 2008 ANNUAL REPORT (FINANCIALS) APPENDIX C DISNEY 2008 ANNUAL REPORT (FINANCIAL S) APPENDIX D DISNEY 2010 ANNUAL REPORT (FINANCIALS)