LOS ANGELES – The Walt Disney Co. is buying Marvel Entertainment Inc. for $4 billion in cash and stock, bringing such characters as Iron Man and Spider-Man into the family of Mickey Mouse and WALL-E.
Under the deal, which was announced Monday and is expected to close by the end of the year, Disney will acquire the rights to 5,000 Marvel characters. Many of them, including the Fantastic Four and the X-Men, were co-created by the comic book legend Stan Lee.
Disney CEO Robert Iger said Marvel's comic books, TV shows, movies and video games amounted to "a treasure trove of content." Iger said the deal would bring benefits like the ones Disney got from buying "Toy Story" creator Pixar Animation Studios Inc. for $7.4 billion in stock in 2006.
"The acquisition of Marvel offers us a similar opportunity to advance our strategy," Iger said, and "to build a business that is stronger than the sum of its parts."
For Marvel, Iger said being in the Disney camp would mean better global distribution and better relationships with retailers to sell its products. Another storied comic book maker, DC Comics, has been under the wings of a major studio since 1969, when Warner Bros. bought the home of Superman, Batman and Wonder Woman.
Marvel Chairman Mort Handel called Disney "a perfect home for our great collection of characters."
One point of the deal is to help Disney appeal to young men who have flocked to theaters to see Marvel superheroes such as Iron Man in recent years. That contrasts with Disney's recent successes among young women with such fare as "Hannah Montana" and the Jonas Brothers.
Marvel TV shows also already account for 20 hours per week of programming on Disney's recently rebranded, boy-focused cable network, Disney XD, and that looks likely to increase, Iger said. The shows are "right in the wheelhouse for boys," he said.
However, analyst David Joyce of Miller Tabak & Co. noted that that the $4 billion offer was at "full price."
Marvel shareholders will receive $30 per share in cash, plus 0.745 Disney shares for every Marvel share they own. That values each Marvel share at $50 based on Friday's closing stock prices.
Marvel shares shot up $9.77, or 25 percent, to $48.42 in afternoon trading Monday. Disney shares fell 79 cents, or 2.9 percent, to $26.05.
Disney investors were probably unhappy to learn that the deal will reduce its earnings per share in the short term and might not turn positive until its 2012 fiscal year. Marvel is profitable — it made $206 million in its last fiscal year on revenue of $676 million — but Disney's earnings per share will drop partly because the company will issue 59 million new shares. Marvel also is releasing two costly blockbusters, "Thor" and "The First Avenger: Captain America" in 2011, and income from DVD sales of those films likely wouldn't roll in until fiscal 2012.
Disney said the boards of both companies have approved the transaction, but it will require an antitrust review and the approval of Marvel shareholders.
Although it began producing its own movies, starting with "Iron Man" last year, Marvel has several deals with other movie studios that Disney said it will honor and re-examine upon expiration.
For example, "Spider-Man 4," set for release in 2011, is being made with Sony Corp.'s Columbia Pictures; "Iron Man 2" will be distributed by Viacom Inc.'s Paramount Pictures next year; and the upcoming "X-Men Origins: Magneto" and "X-Men Origins: Wolverine 2," both due in 2011, are to be distributed by News Corp.'s 20th Century Fox.
Iger said Pixar also had third-party licensing agreements that eventually expired, allowing the companies to move forward together.