Stock of the Day
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Walt Disney Co. (DIS)
Disney Bags Marvel for $4B
The forever expanding company known as Walt Disney Co. has added Marvel Entertainment (MVL: Charts, News, Offers) to its list of acquisitions. While some companies are trying to shed excess fat, Disney is busy securing its place in the industry for years to come. The deal between the two animation giants is valued at $4 billion in cash and stock. Why has Disney decided to make this purchase? Was this decision the right one for the company and how will it impact the future?
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| Stock Analysis |
Disney's purchase of Marvel is not a total surprise. Over the past few years, the company has been expanding its presence in the animated movies world. This acquisition will usher in a whole new list of possibilities for the company. Under the deal, Disney will acquire ownership of Marvel including its popular comic book characters such as The Fantastic Four, Spider-Man, the X-Men, The Incredible Hulk and Iron Man, all of which have been turned into highly valuable feature film franchises. This will result in major revenue opportunities for Disney. The three spider-man films alone grossed around $2.5 billion worldwide for Marvel. Disney is also trying to capitalize on the growing DVD rental business. Purchases of movies have dwindled, but more and more consumers are starting to rent DVDs thanks to popular online services such as NetFlix. In late July, following Disney's latest earnings report, CEO Robert Iger pointed to the value of making movies that can easily be watched several times, during an era when DVD rentals are rising in popularity while DVD sales are in decline. The long list of Marvel characters that Disney now owns will definitely allow the company more flexibility in creating these types of movies. Iger reiterated this point by saying, “We believe that adding Marvel to Disney's unique portfolio of brands provides significant opportunities for long-term growth and value creation.”
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This deal has cleared the way for Disney to remain as one of the biggest animation movie makers. Not only are they obtaining a popular franchise, but a long list of devoted followers. The new addition of characters to its theme parks will also bolster its revenue stream. Comic book lovers are worried that Disney will destroy the legacy that Marvel worked so hard to obtain, but most would agree that the media giant is the best home for the characters. All things considered, this deal seems to be mutually beneficial for both companies. Acquisitions haven't been Disney's strength. Since buying Pixar in 2006, the stock has been flat. Hopefully, this deal will give the company's stock the boost that is so desperately needs.
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More Stuff Related to Disney
Disney-Marvel: A Superhuman Price? -- Spider-Man and Iron Man may have superhuman powers, but is Walt Disney paying a superhuman price to acquire their owner, Marvel Entertainment?
Disney's Getaway Island Receives a Makeover-- Disney Cruise Line is preparing for a population surge on its private island, so the company is giving its private island a little facelift.
Disney CEO: Deal to Buy Marvel Good for Both Firms
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Other Stocks in the News
Baker Hughes and BJ Services Strike $5.5 Billion Deal -- Baker Hughes (BHI) said Monday it would pay $5.5 billion in cash and stock to buy BJ Services Co. (BJS).
Merck Reorganizes as Schering Deal Nears Close -- Merck & Co. Inc. (MRK) unveiled the proposed organizational structure for company if and when its proposed merger with Schering-Plough Corp. (SGP) is completed.
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