Disney buys Pixar

January 24, 2006

The Walt Disney Company has finalized a US$7.4 billion deal to acquire its long-time partner Pixar in an all stock buy-out. The deal will make Steve Jobs, current Pixar and Apple CEO, Disney's largest shareholder with about 7% (valued at over $3.5 billion) and a member of the board of directors.

The merger was speculated all day Tuesday on the stock market and the announcement came just after trading closed for the day. Terms of the merger include Pixar's John Lasseter becoming Disney's new chief creative officer in charge of animation at the combined Disney-Pixar Animation Studios, as well as principal creative advisor at, the unit of the company responsible for research and development of Disney theme parks worldwide.

Jobs purchased what became Pixar for $10 million in 1986 from George Lucas's computer animation division at Lucasfilm. , its first feature film, came a decade later, and began a long string of animation hits, including Finding Nemo. Such successes proved to be increasingly elusive for Disney to manage on its own. The partnership between the two studios had become shaky in recent years, as former Disney head clashed with Jobs over the renewal terms of their agreement. In 2003, prior to his dismissal from Disney, Eisner infuriated Pixar's creative team by predicting Finding Nemo would be a failure. Steve Jobs broke off negotiations in January 2004, having told one executive previously, "I don't see how the relationship can continue as long as Eisner is there."