Continuing its strategy of delivering exceptional creative content to
audiences around the world, The Walt Disney Company (NYSE: DIS) has
agreed to acquire Lucasfilm Ltd. in a stock and cash transaction.
Lucasfilm is 100% owned by Lucasfilm Chairman and Founder, George Lucas.
Robert A. Iger, chairman and CEO, The Walt Disney Company, and George Lucas, chairman and founder, Lucasfilm sign the agreement for The Walt Disney Company to acquire Lucasfilm Ltd. Credit: Disney
Under the terms of the agreement and based on the closing price of
Disney stock on October 26, 2012, the transaction value is $4.05
billion, with Disney paying approximately half of the consideration in
cash and issuing approximately 40 million shares at closing. The final
consideration will be subject to customary post-closing balance sheet
"Lucasfilm reflects the extraordinary passion, vision, and storytelling
of its founder, George Lucas," said Robert A. Iger, Chairman and Chief
Executive Officer of The Walt Disney Company. "This transaction combines
a world-class portfolio of content including Star Wars, one of
the greatest family entertainment franchises of all time, with Disney's
unique and unparalleled creativity across multiple platforms,
businesses, and markets to generate sustained growth and drive
significant long-term value."
"For the past 35 years, one of my greatest pleasures has been to see Star
Wars passed from one generation to the next," said George Lucas,
Chairman and Chief Executive Officer of Lucasfilm. "It's now time for me
to pass Star Wars on to a new generation of filmmakers. I've
always believed that Star Wars could live beyond me, and I
thought it was important to set up the transition during my lifetime.
I'm confident that with Lucasfilm under the leadership of Kathleen
Kennedy, and having a new home within the Disney organization, Star
Wars will certainly live on and flourish for many generations to
come. Disney's reach and experience give Lucasfilm the opportunity to
blaze new trails in film, television, interactive media, theme parks,
live entertainment, and consumer products."
Under the deal, Disney will acquire ownership of Lucasfilm, a leader in
entertainment, innovation and technology, including its massively
popular and "evergreen" Star Wars franchise and its operating
businesses in live action film production, consumer products, animation,
visual effects, and audio post production. Disney will also acquire the
substantial portfolio of cutting-edge entertainment technologies that
have kept audiences enthralled for many years. Lucasfilm, headquartered
in San Francisco, operates under the names Lucasfilm Ltd., LucasArts,
Industrial Light & Magic, and Skywalker Sound, and the present intent is
for Lucasfilm employees to remain in their current locations.
Kathleen Kennedy, current Co-Chairman of Lucasfilm, will become
President of Lucasfilm, reporting to Walt Disney Studios Chairman Alan
Horn. Additionally she will serve as the brand manager for Star Wars,
working directly with Disney's global lines of business to build,
further integrate, and maximize the value of this global franchise. Ms.
Kennedy will serve as executive producer on new Star Wars feature
films, with George Lucas serving as creative consultant. Star Wars
Episode 7 is targeted for release in 2015, with more feature
films expected to continue the Star Wars saga and grow the
franchise well into the future.
The acquisition combines two highly compatible family entertainment
brands, and strengthens the long-standing beneficial relationship
between them that already includes successful integration of Star Wars
content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.
Driven by a tremendously talented creative team, Lucasfilm's legendary Star
Wars franchise has flourished for more than 35 years, and offers a
virtually limitless universe of characters and stories to drive
continued feature film releases and franchise growth over the long term. Star
Wars resonates with consumers around the world and creates extensive
opportunities for Disney to deliver the content across its diverse
portfolio of businesses including movies, television, consumer products,
games and theme parks. Star Wars feature films have earned a
total of $4.4 billion in global box to date, and continued global demand
has made Star Wars one of the world's top product brands, and
Lucasfilm a leading product licensor in the United States in 2011. The
franchise provides a sustainable source of high quality, branded content
with global appeal and is well suited for new business models including
digital platforms, putting the acquisition in strong alignment with
Disney's strategic priorities for continued long-term growth.
The Lucasfilm acquisition follows Disney's very successful acquisitions
of Pixar and Marvel, which demonstrated the company's unique ability to
fully develop and expand the financial potential of high quality
creative content with compelling characters and storytelling through the
application of innovative technology and multiplatform distribution on a
truly global basis to create maximum value. Adding Lucasfilm to Disney's
portfolio of world class brands significantly enhances the company's
ability to serve consumers with a broad variety of the world's
highest-quality content and to create additional long-term value for our
The Boards of Directors of Disney and Lucasfilm have approved the
transaction, which is subject to clearance under the Hart-Scott-Rodino
Antitrust Improvements Act, certain non-United States merger control
regulations, and other customary closing conditions. The agreement has
been approved by the sole shareholder of Lucasfilm.
Note: Additional information and comments from Robert A. Iger,
chairman and CEO, The Walt Disney Company, and Jay Rasulo, senior
executive vice president and CFO, The Walt Disney Company, regarding
Disney's acquisition of Lucasfilm, are attached.
Investor Conference Call:
An investor conference call will take place at approximately 4:30 p.m.
EDT / 1:30 p.m. PDT today, October 30, 2012. To listen to the Webcast,
turn your browser to http://thewaltdisneycompany.com/investors/events
or dial in domestically at (888) 771-4371 or internationally at (847)
585-4405. For both dial-in numbers, the participant pass code is
The discussion will be available via replay on the Disney Investor
Relations website through November 13, 2012 at 5:00 PM EST/2:00 PM PST.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries and affiliates,
is a leading diversified international family entertainment and media
enterprise with five business segments: media networks, parks and
resorts, studio entertainment, interactive media, and consumer products.
Disney is a Dow 30 company with revenues of over $40 billion in its
Fiscal Year 2011.
About Lucasfilm Ltd.
Founded by George Lucas in 1971, Lucasfilm is a privately held,
fully-integrated entertainment company. In addition to its
motion-picture and television production operations, the company's
global activities include Industrial Light & Magic and Skywalker Sound,
serving the digital needs of the entertainment industry for
visual-effects and audio post-production; LucasArts, a leading developer
and publisher of interactive entertainment software worldwide; Lucas
Licensing, which manages the global merchandising activities for
Lucasfilm's entertainment properties; Lucasfilm Animation; and Lucas
Online creates Internet-based content for Lucasfilm's entertainment
properties and businesses. Additionally, Lucasfilm Singapore, produces
digital animated content for film and television, as well as visual
effects for feature films and multi-platform games. Lucasfilm Ltd. is
headquartered in San Francisco, California.
Certain statements in this communication and the attachments may
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements relate
to a variety of matters, including but not limited to: the operations of
the businesses of Disney and Lucasfilm separately and as a combined
entity; the timing and consummation of the proposed merger transaction;
the expected benefits of the integration of the two companies; the
combined company's plans, objectives, expectations and intentions and
other statements that are not historical fact. These statements are made
on the basis of the current beliefs, expectations and assumptions of the
management of Disney and Lucasfilm regarding future events and are
subject to significant risks and uncertainty. Investors are cautioned
not to place undue reliance on any such forward-looking statements,
which speak only as of the date they are made. Neither Disney nor
Lucasfilm undertakes any obligation to update or revise these
statements, whether as a result of new information, future events or
Actual results may differ materially from those expressed or implied.
Such differences may result from a variety of factors, including but not
legal or regulatory proceedings or other matters that affect the
timing or ability to complete the transactions as contemplated;
the risk that the businesses will not be integrated successfully;
the possibility of disruption from the merger making it more difficult
to maintain business and operational relationships;
the possibility that the merger does not close, including but not
limited to, due to the failure to satisfy the closing conditions;
any actions taken by either of the companies, including but not
limited to, restructuring or strategic initiatives (including capital
investments or asset acquisitions or dispositions);
developments beyond the companies' control, including but not limited
to: changes in domestic or global economic conditions, competitive
conditions and consumer preferences; adverse weather conditions or
natural disasters; health concerns; international, political or
military developments; and technological developments.
Additional factors that may cause results to differ materially from
those described in the forward-looking statements are set forth in the
Annual Report on Form 10-K of Disney for the year ended October 1, 2011,
under the heading "Item 1A--Risk Factors," and in subsequent reports on
Forms 10-Q and 8-K and other filings made with the SEC by Disney.
ROBERT A. IGER, CHAIRMAN AND CEO, THE WALT DISNEY COMPANY
REMARKS FOR ANALYSTS REGARDING DISNEY'S ACQUISITION OF LUCASFILM
LTD., AS PREPARED
As we just announced, The Walt Disney Company has agreed to acquire
Lucasfilm and its world class portfolio of creative content - including
the legendary Star Wars franchise - along with all of its
operating businesses, including Industrial Light & Magic and Skywalker
George Lucas is a visionary, an innovator and an epic storyteller - and
he's built a company at the intersection of entertainment and technology
to bring some of the world's most unforgettable characters and stories
to screens across the galaxy. He's entertained, inspired, and defined
filmmaking for almost four decades and we're incredibly honored that he
has entrusted the future of that legacy to Disney.
Disney has had a great relationship with George that goes back a long
way - with Star Wars theme attractions in our parks in Anaheim,
Orlando, Paris and Tokyo. This acquisition builds on that foundation and
combines two of the strongest family entertainment brands in the world.
It makes sense, not just because of our brand compatibility and previous
success together, but because Disney respects and understands - better
than just about anyone else - the importance of iconic characters and
what it takes to protect and leverage them effectively to drive growth
and create value.
Lucasfilm fits perfectly with Disney's strategic priorities. It is a
sustainable source of branded, high quality creative content with
tremendous global appeal that will benefit all of Disney's business
units and is incredibly well suited for new business models, including
digital platforms. Adding the Lucasfilm IP to our existing Disney, Pixar
and Marvel IP clearly enhances our ability to serve consumers,
strengthening our competitive position -- and we are confident we can
earn a return on invested capital well in excess of our cost of capital.
Star Wars in particular is a strong global brand, and one of the
greatest family entertainment franchises of all time, with hundreds of
millions of fans around the globe. Its universe of more than 17,000
characters inhabiting several thousand planets spanning 20,000 years
offers infinite inspiration and opportunities - and we're already moving
forward with plans to continue the epic Star Wars saga.
The last Star Wars movie release was 2005's Revenge of the Sith
- and we believe there's substantial pent up demand. In 2015, we're
planning to release Star Wars Episode 7 - the first feature film
under the "Disney-Lucasfilm" brand. That will be followed by Episodes 8
and 9 - and our long term plan is to release a new Star Wars
feature film every two to three years. We're very happy that George
Lucas will be creative consultant on our new Star Wars films and
that Kathleen Kennedy, the current Co-Chair of Lucasfilm, will executive
produce. George handpicked Kathy earlier this year to lead Lucasfilm
into the future. She'll join Disney as President of Lucasfilm, reporting
into Walt Disney Studios Chairman Alan Horn and integrating and building
the Star Wars franchise across our company.
Our successful acquisitions of Pixar and Marvel prove Disney's unique
ability to grow brands and expand high-quality creative content to its
fullest franchise potential and maximum value.
We've leveraged Pixar's terrific characters and stories into franchises
across our company - from feature films to consumer products online
games, major attractions in our theme parks, and more.
The 2006 Pixar acquisition delivered more than great Pixar content -- it
also delivered the means to energize and revitalize the creative engine
at Walt Disney Animation - which was crucial to our long term success.
Animation is the heart and soul of Disney and our successful creative
resurgence will be on full display this weekend when Wreck-It-Ralph
opens in theaters across the country.
Our acquisition of Marvel three years later combined Marvel's strong
global brand and world-renowned library of characters with Disney's
creative skills, unparalleled global portfolio of entertainment
properties, and an integrated business structure that maximizes the
value of creative content across multiple platforms and territories. Our
first two Marvel films - Thor and Captain America grossed
a total of more than $800 million at the box office. This year, Marvel's The
Avengers grossed more than $1.5 billion to become the world's third
highest grossing movie of all time - and an important and lucrative
franchise for us.
We're looking forward to a robust slate of new Marvel movies - starting
with Iron Man 3 and Thor: The Dark World next year,
followed by Captain America: The Winter Soldier in 2014. And, as
we announced previously, Joss Whedon is writing and directing Avengers
2 and developing a Marvel-based series for ABC.
Pixar and Marvel both fit our criteria for strategic acquisitions - they
add great IP that benefits multiple Disney businesses for years to come,
and continue to create value well in excess of their purchase price. The
acquisition of Lucasfilm is in keeping with this proven strategy for
success and we expect it to create similar opportunity for Disney to
drive long-term value for our shareholders.
We're clearly excited about this move forward. We believe we can do
great things with these amazing assets....we have a proven track record of
maximizing the value of our strategic acquisitions.... and we're poised to
do the same with this one.
JAY RASULO, SENIOR EXECUTIVE VICE PRESIDENT AND CFO, THE WALT DISNEY
REMARKS FOR ANALYSTS REGARDING DISNEY'S ACQUISITION OF LUCASFILM
LTD., AS PREPARED
Lucasfilm, and more specifically the Star Wars franchise, fits
perfectly within the Disney portfolio of intellectual properties and the
strategic and financial implications of this acquisition are compelling.
Our team has spent a tremendous amount of time evaluating this deal and
we have concluded we are uniquely positioned to maximize the value of
Lucasfilm's IP in a manner that can generate substantial value for our
shareholders above and beyond the purchase price.
In this transaction we will acquire rights to the Star Wars and Indiana
Jones franchises, a highly talented and expert team, Lucasfilm's
best-in-class post production businesses, Industrial Light and Magic and
Skywalker Sound, and a suite of cutting edge entertainment technologies.
Our valuation focused almost entirely on the financial potential of the Star
Wars franchise, which we expect to provide us with a stream of
storytelling opportunities for years to come delivered via all relevant
platforms on a global basis.
There are a number of ways our company will derive value from
Lucasfilm's intellectual property--some of which can be realized
immediately while others will accrue to us over time. George and his
team have built Star Wars into one of the most successful and
enduring family entertainment franchises in history, as well as one of
the best selling licensed character merchandise brands in the U.S. and
around the world. However, we believe there is great opportunity to
further expand the consumer products business. Today, Star Wars
is heavily skewed toward toys and North America. We see great
opportunity domestically to extend the breadth and depth of the Star
Wars franchise into other categories. We also plan to leverage
Disney's global consumer products organization to grow the Star Wars
consumer products business internationally.
Let me note that in 2012 Lucasfilm's consumer products business is
expected to generate total licensing revenue that is comparable to the
roughly $215 million in consumer products revenue Marvel generated in
2009, the year in which we announced our acquisition. With renewed film
releases, and the support we can give the Star Wars property on
our Disney-branded TV channels, we expect that business to grow
substantially and profitably for many years to come.
We also expect to create significant value in the film business. We plan
to release the first new Star Wars film in 2015, and then
plan to release one film every two to three years. These films will be
released and distributed as part of our target slate of 8-10 live-action
films per year, and will augment Disney's already strong creative
pipeline for many years to come. Lucasfilm has not released a Star
Wars film since Revenge of the Sith in 2005. However,
adjusted for inflation, as well as growth in both international box
office and 3D, we estimate the three most recent Star Wars films
would have averaged about $1.5 billion in global box office in today's
dollars. This speaks to the franchise's strength, global appeal and the
great opportunity we have in the film business.
We also expect to utilize Star Wars in other businesses including
Parks & Resorts, in games and in our television business. These
initiatives were also considered in our valuation.
Under the terms of the agreement, Disney will buy Lucasfilm for $4.05
billion, consisting of approximately fifty percent cash and fifty
percent in Disney stock. Based on Friday's closing price of Disney
stock, we expect to issue approximately 40 million Disney shares in this
transaction. We continue to believe our shares are attractively priced
at current levels and therefore, we currently intend to repurchase all
of the shares issued within the next two years-- and that's in addition
to what we planned to repurchase in the absence of the transaction.
Our valuation of Lucasfilm is roughly comparable to the value we placed
on Marvel when we announced that acquisition in 2009. Our Lucasfilm
valuation is almost entirely driven by the Star Wars franchise,
so any success from other franchises would provide upside to our base
case. I realize it may be a challenge for you to quantify our
opportunity given the limited amount of publicly available information.
But to give you some perspective on the size of the Lucasfilm business--
in 2005, the year in which the most recent Star Wars film was
released, Lucasfilm generated $550 million in operating income. We've
taken a conservative approach in our valuation assumptions, including
continued erosion of the home entertainment market, and we expect this
acquisition to create value for our shareholders.
In terms of the impact on our financials, we expect the acquisition to
be dilutive to our EPS by low single digit percentage points in fiscal
2013 and 2014 and become accretive to EPS in 2015.
Our capital allocation philosophy has been consistent since Bob took
over as CEO. In addition to returning capital to shareholders, we have
invested, both organically and through acquisitions, in high quality,
branded content that can be seamlessly leveraged across our businesses.
Our acquisition of Lucasfilm is entirely consistent with this strategy,
and we're incredibly excited by the prospect of building on Lucasfilm's
successful legacy to create significant value for our shareholders.
Editor's note: Video of Bob Iger and George Lucas: http://bit.ly/TSrYay
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50459808&lang=en
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