Life in the fast lane

25 January 2006 By Fiona Maharg-Bravo

Few question the strategic rationale behind Disney s $7.4bn bid for Pixar. But the hefty price tag makes the move risky. To justify the price, Disney needs to make sure the animation studio keeps up its remarkable winning streak.

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Walt Disney agreed to acquire Pixar, the animated film studio, for $7.4bn. The US film studio will pay 2.3 Disney shares for every Pixar share. That represents a 30% premium to the price where Pixar shares were trading before speculation emerged in October. Disney said it expects the deal to be earningsaccretive by 2008, after it repurchases all the newly issued shares.

Steve Jobs, Pixar's founder and chief executive of Apple, will take a seat on Disney's board and become its biggest shareholder. Another Pixar executive, Ed Catmull, will become president of the combined studios while John Lasseter will become its principal creative advisor.

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