In January 2006, various Wall Street analysts speculated that Disney, one of the largest motion picture studios in the world, was planning to acquire Pixar Animation Studios, the producer of hit animation movies, such as Toy Story, Finding Nemo, The Incredibles, etc. 7 With its traditional hand-drawn animation business declining, Disney was looking for ways to preserve its animation business. The company had an agreement with Pixar to distribute and market animation movies produced by the latter which was scheduled to end in June 2006. As the agreement came closer to an end, Disney considered various options, including a takeover, a stake in Pixar or an extended agreement. While the first option was most likely, analysts debated whether the two should merge or not.

Questions:

1. What are the advantages of the merger for Disney?(10 Marks)

2. What are the advantages of the merger for Pixar? ?(10 Marks)

3. Can synergies be developed? ?(10 Marks)

4. How can Disney and Pixar be integrated? ?(10 Marks)