Walt Disney Co said on Monday it plans to buy Marvel Entertainment Inc for $4 billion in a deal that would add characters like Iron Man, Spider-Man and the Fantastic Four to its entertainment empire.
Disney is striking the biggest media deal of the year so far -- one that will unite the Incredible Hulk and Mickey Mouse -- at a time when the media business is struggling to cope with spending cutbacks by both consumers and advertisers.
Marvel has a stable of wildly popular characters that it has brought to the big screen in home-run films like Iron Man.
A sequel, Iron Man 2 is due to hit the theaters next year, while Thor, Spider-Man 4 and the first Avengers movie are slated for a 2011 release.
For Disney, movies like those should help address a key area of concern among investors: How it can better reach more young males.
This helps give Disney more important exposure to the young male demographic that they have sort of lost some ground with in recent years, said David Joyce, an analyst with Miller Tabak & Co.
Disney Chief Financial Officer Tom Staggs told Reuters on Monday, (Marvel's) audience is surprisingly broad. It transcends gender and age and has real potential worldwide. They skew a little more toward boys than many of our properties.
Indeed, Disney has long been a blockbuster brand with girls thanks to characters like Hannah Montana, Cinderella and Snow White, but has struggled to achieve the same kind of success with boys.
To do so, Disney agreed to pay $50 per share in cash and stock for Marvel, a premium of 29 percent to Marvel's closing stock price of $38.65 on Friday. The deal has been approved by the boards of both companies.
Marvel shareholders would receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own.
Marvel's shares shot up to $48.75 in early trade.
Disney approached Marvel a few months ago to get to know them, Staggs said. The overture began with a meeting between Disney Chief Executive Robert Iger and Marvel CEO Ike Perlmutter and evolved into merger discussions over a series of meetings, Staggs said.
We at Disney had admired them because of their position and asset base, Staggs said. With conversations over time we came to believe in the value of a combination.
Shares of Disney, which will acquire ownership more than 5,000 Marvel characters, dropped about 2.3 percent in early trade. The deal is expected to close by year-end, and is expected to add to Disney earnings in two years.
The acquisition came as a surprise, even though Iger had mentioned recently that the company would consider acquisitions that bolstered Disney brands across international markets and on new technology platforms.
Citigroup analyst Jason Bazinet said that in addition to bolstering their standing among young males, the deal could help Disney throughout its television, movies, and amusement park properties.
(Reporting by Paul Thomasch; Additional reporting by Franklin Paul, Gina Keating and John Tilak; Editing by Derek Caney)