In a conference call discussing the acquisition--the largest media deal year-to-date and the biggest since Disney's $7.4-billion acquisition of Pixar in 2006--Disney CFO Tom Staggs said that cost savings were not the driver, although "there are some opportunities for efficiencies." He added, "This was not a deal that Marvel had to do or a deal that Disney had to do."
Staggs and Disney CEO Robert Iger both made the point that the Mouse House intends to leave the current Marvel operations and creative teams intact on both coasts"in contrast to other large M&A deals this year that have resulted in consolidation of operations. For example, Disney has no plans to consolidate Marvel Studios, currently headquartered in Manhattan Beach, CA, into its Burbank operations.
What Disney does plan to do is tap into some of the 5,000 comic-book characters under the Marvel umbrella, potentially bringing them to a wider audience at major retailers and Disney's own theme parks as well as via movies, TV and video. Some of Marvel's best-known properties, including Spider-Man and X-Men, have spawned blockbuster film franchises for other studios.
"We believe that adding Marvel to Disney's unique portfolio of brands provides significant opportunities for long-term growth and value creation," Iger says in a statement. A major factor in that value creation will be expanding Disney's reach to boys and young men, an audience the two companies already tap via Marvel's series on Disney's XD animated cable channel.
However, Staggs said in Monday's conference call that he didn't anticipate that the deal would start generating an ROI for Disney for at least the next few years. For Marvel stockholders, though, the payoff will be much more immediate, as the transaction value of $50 per Marvel share is about 29% higher than the company's August 28 closing price of $38.65.
In early August, Marvel reported second-quarter net sales of $116.3 million and net income of $29 million, compared to sales and income of $156.9 million and $46.7 million, respectively, in Q2 2008. The company attributed the decrease in part to the initial recognition of licensing revenues for the Iron Man and Incredible Hulk feature films in Q2 '08--a sales bulge that did not exist in Q2 of this year, with no Marvel-related movies in theaters over the summer. It revised upward the low end of its earnings guidance, projecting net income of $95 million to $105 million, compared with the $86 million to $105 million guidance it had issued previously.
On the East Coast, Marvel is headquartered at the Moinian Group's 417 Fifth Ave., where other media tenants include Atari and Turner Broadcasting. It also has operations in Newburgh, NY and Mahwah, NJ, as well as European offices in London and the movie-studio unit in California.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
