Disney Buys Lucasfilm - Analyst Blog

The Walt Disney Company (DIS) announced the closure of the acquisition of Lucasfilm Ltd. LLC. for approximately $4.06 billion. The move was in line with the company’s core strategies, which include deploying capital towards enhancing the portfolio of its globally recognized brands in order to drive long-term growth.

Disney made a cash payment of approximately $2.208 billion and issued 37,076,679 shares for the deal. Earlier, in October, Disney stated that it will pay half of the amount in cash and will issue 40 million shares on closure.

Alongside, Disney will gain Lucasfilm’s renowned ‘Star Wars’ and Indiana Jones franchises. Further, Disney will acquire the operating businesses of the company, including live-action film production, animation, visual effects, consumer products and audio post production. Kathleen Kennedy, the current Co-Chairman of Lucasfilm, will take over as the President of Lucasfilm. 

Walt Disney is one of the world’s largest diversified entertainment companies and commands a formidable portfolio of globally recognized brands, primarily its namesake brand – Walt Disney, followed by ABC, ESPN, Pixar and Marvel Entertainment. These renowned brands offer a strong competitive edge to the company and bolster its well-established position in the market against major players like News Corporation (NWSA) and Time Warner Inc. (TWX).

We believe the acquisition will not only fortify Disney’s position but will also expand its world-class portfolio of content while creating long-term opportunities by driving revenue growth through its multiple platforms, which include theme parks, consumer products, media networks and studio entertainment.

We maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Disney currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

 
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