PRESENTED TO

MANI PRATAP SIR

SCHOOL OF LAW AND GOVERNANCE

PRESENTED BY
ABHIJEET KUMAR
CUSB1813125002
SECTION B
B.A.LL.B.(hons) 9th SEMESTER
BATCH. 2019-2024
 ACKNOWLEDGEMENT
In the present world of competition there is a race of existence in which those who are
willing to come forward succeed. Project is like a bridging link between theoretical
and practical aspects of learning. With this willing I started this particular project.
I would like to express my special thanks of gratitude towards my teacher, Mani
pratap sir, School of Law and Governance, Central University of South Bihar, for
giving me this golden opportunity to work on successful post merger integration
which also helped me in doing a lot of research and I came to know about so many
new things. I am really thankful to him.
I would also like to thank the Administration and staff of the Library of Central
University of South Bihar for providing me online access to SCC Online, JSTOR,
which was a boon for my research work.
I would also like to thank my parents and friends for their constant support, love,
praises and prayers throughout this project work.
 Table of Contents
 Introduction
 Timeline
 The vertical merger between Walt Disney and Pixar
 What other alternatives were available?
 Reasons for the merger
 Comparison chart of Pixar and Walt Disney
 Negotiating powers of seller
 Negotiating powers of buyer
 Reasons for the successful corporate marriage of Walt Disney and Pixar
 Merging of corporate culture:
 Manage change through suits versus slacks:
 The corporate culture of Pixar remained intact:
 Utilization of merged strength:
 Disney’s potential to utilize the assets of Pixar:
 Conclusion
Introduction
Walt Disney is a media and entertainment company founded in 1923 by Walt Disney
and Roy Disney. Pixar was found in 1986 by Steve Jobs and is the pioneer in
animation. In 2006, Pixar was acquired by Walt Disney. So, here we going to discuss
the reasons why the merger was the best option and what are the reasons behind the
successful merger of Walt Disney and Pixar even after so many years.

Timeline
 The relations between Disney and Pixar were built in 1991 when they signed
an agreement to produce and distribute the first computer-generated
animated movie together that movie was “Toy Story”.
 After the success of the movie Toy Story in 1995, Disney and Pixar in 1997
signed another contract to produce five movies together in the next ten
years.
The list of movies they produced under this contract includes:

1. The Bug’s Life

2. Toy story 2
3. Monsters, Inc.
4. Finding Nemo
5. The Incredibles

 When the collaboration deal was at its end in January 2009, Disney announced
that they will acquire Pixar Animation Studios for $7.4 billion.

The vertical merger between Walt Disney and

Pixar
In a vertical merger, the merger takes place between two or more companies that
operate for the specified finished product at different stages in the production process.
This usually takes place so that there can be an increase in synergies created by the
merging of companies. Vertical merging can be cost-efficient, increase profits, helps
in diversification, and expands the market.

And when it comes to the merger of Walt Disney and Pixar it was a vertical merger
because Pixar has specialization in animations and whereas Disney’s main focus is on
creating animated movies. Both companies were in the same field and were operating
at different stages of production. Their synergy has resulted in the production of
smashing hits worldwide.

The merger of Disney and Pixar was made on two alliances:

 1. Sales Alliance: Here both Disney and Pixar will have to works on
maximizing the profits by the marketing of their product together.
2. Investment Alliance: Here both companies have to invest in the animation
pictures and both will get a share of 50% profit made from the movies.

What other alternatives were available?

Internal Development:

The following benefits were available to Disney:

 Acquiring human and technology assets;

 3D technology; and
 Development cost and fierce competition.
Strategic Alliance:

The following benefits were available to Disney:

 Computer Animated Production System;

 Feature film related agreement; and
 Co-production agreement.
Merger & Acquisition:

The following benefits were available to Disney:

 Modernized animation department;

 Elimination of competition; and
 Access to technology as well as human capital.

Reasons for the merger

 Disney by acquiring Pixar was getting the pool of talent in both creative and
technical terms. This was going to be a great asset for Disney. The
combined efforts and resources of Disney-Pixar can produce more movies
in a year resulting in value addition for Disney.

 Disney was not getting the response that is expected and hence acquiring Pixar
could have helped Disney in content generation with the advice of experts
in Disney for distribution resulting in the maximizing revenue amount for
both of the domains.

 For Pixar, this deal will be beneficial in terms of gaining monetary support
from Disney.
 Getting acquired by Disney would provide Pixar a better position in the
market against competitors like Lucasfilm, DreamWorks, Universal, etc.
Disney was having experience in the animation industry and has assets like
theme parks. And it would help Pixar to get the ratio of private equity
increase. The acquisition was also helpful for Apple iTunes.
Negotiating powers of seller
Pixar had have been great in creating the latest technology for animating short movies
and Disney was not having that technology. So, by acquiring Pixar, Disney would
have got the latest technology to stand in the market. Disney and Pixar both have
talented teams of scriptwriters and animators. While acquiring Pixar, Disney knew
that in the US, scriptwriters are unionized and in past, they have gone to strikes and it
has resulted in the loss of hundreds millions of dollars to the studios. Disney was clear
that employees of Pixar cannot be taken for granted.

Negotiating powers of buyer

Both Disney and Pixar had a great place in the market. All the movies produced by
Pixar then were spinners for whoever was associated with it. Disney had considerable
clout in bargaining for contracts.

In this deal, Bobs knew that acquisition of Pixar can turn Disney around therefore to
reduce the fear of oppression he assured that the corporate culture of Pixar will be
kept untouched. We can therefore say that here Disney was having low bargaining
power.

Reasons for the successful corporate marriage

of Walt Disney and Pixar
Merging of corporate culture:
Certain things in the change management process have to be right for getting benefits
from the merger of the corporate culture of two companies. And Disney and Pixar
were able to manage this without any glitch:

 Both companies were able to highlight their values;

 The approach towards the merger was constructive, with Disney as it
employed the talent of Pixar;
 Disney accepted the employment conditions of Pixar, which helped the
talented people stayed;
 The communication between the executive teams from both sides was
effective.

Manage change through suits versus slacks:

Iger in this deal was ready to accept the relaxed atmosphere of Pixar. In most cases, we see the dominant force in
mergers but Disney accepted the t-shirt and slacks approach of Pixar as its strength.

Disney accepted the old employment agreement of Pixar and its employees were not
forced to sign s new employment agreement. A whole ream of promises was made by
Disney. After the year executives of Pixar reviewed the list of promises and found
that each and every promise was kept. This confirmed the trust and Pixar become
more comfortable in doing things in Disney’s way.

The corporate culture of Pixar remained intact:

The deal between Disney and Pixar allowed Pixar’s employees to use the same email
id as before. It didn’t consume the advantages of Pixar. Pixar’s identity was not taken
away. And in return, Disney encouraged Pixar to produce more than one movie in a
year.

Utilization of merged strength:

It’s obvious for the employees of the company that is getting acquired, to get nervous
as in most of the mergers there is a vast change in the working environment.

But the merger of Disney and Pixar was unique in itself, here Disney asked Pixar for
how things should be done. Iger asked Senior Pixar employees “how to improvement
can be done in underperforming divisions of Disney?” and made the best use of them.
Pixar has to focus on the improvement to be made in an animation department and
computer-generated animations.

Disney’s potential to utilize the assets of Pixar:

The foremost reason behind the success of the Disney and Pixar merger is that
investors were able to see the potential of Disney to leverage the computer-animated
character of Pixar to be used in Disney’s vast network market. We can see the
example of “Cars”, the revenue generated by it was around $5 million. Pixar
developed movies as well as the sequels of original movies. Of course, the experience
of Iger in merging the companies helped a lot.

The revenue generated after the merger speaks for itself, indicating that this is one of
the most successful mergers at present. The projects like Incredibles 2, Toy Story4
have surpassed the revenue of $1 billion.

Conclusion
The merger of Walt Disney and Pixar is one of the most successful corporate mergers
in these years. This acquisition was of benefit for both companies. For Disney, it was
of benefit because of innovative ideas in the animation studio and the technology
Pixar had. This merger had given many blockbuster movies till now. The main reason
for the success of the merger was the negotiations done by both companies.