A marriage between the entertainment titans Disney and Marvel has proved a smash hit with the investment community.
The bankers involved in Walt Disney & Co.'s acquisition of Marvel Entertainment, the publisher of comic books featuring superheroes like Spider-Man and Iron Man, had deal books and fairness opinions with titles like "How Mickey and Spidey Got Hitched." The parties in the transaction were given character names — Disney was referred to as "Daredevil," while Marvel was called "Maverick" — and many of the young associates on the deal will probably remember this (in the words of one banker involved) as their "coolest" assignment.
But this deal was about more than the coolness factor. Disney got 5,000 or so Marvel characters, who can be brought to life on film and in theme parks. The thousands of characters involved in this purchase, including the ones in the boardroom, make this IDD's Media Deal of the Year.
Disney had had its eye on Marvel for a while, but it came as a surprise to Isaac Perlmutter, Marvel's chief executive, when Robert Iger, Disney's president and CEO (who was behind the entertainment giant's $6.3 billion purchase of Pixar in 2006), called in June to discuss a possible deal.
"Disney is a content company, a creative company — probably the best in the world — and has a strong understanding of intellectual property. Marvel also has a deep culture with a sensitivity to Hollywood interpretations, and the company's convictions about its characters and storylines are almost religion," says Jeff Kaplan, global head of M&A at Bank of America Merrill Lynch, which acted as the sole adviser to Marvel and has a longstanding relationship with its senior management.
Both Perlmutter and Marvel's board believed in the long-term value of the sale, and they wanted to retain an interest in the company and maintain some creative control over the content, so the transaction, worth $4.3 billion, was structured as a combination of stock (40%) and cash (60%). Perlmutter will oversee Marvel operations within the Disney kingdom.
"Marvel had presence in the boys space, but what it lacked was a big consumer presence," says Andy Gordon, head of global media investment banking at Goldman Sachs, which served as financial adviser to Disney. "As Marvel is at its core a content company, the deal is consistent as part of Disney's strategy to provide high-quality content. Most people felt this was a perfect combination."
Investors certainly saw the possibilities in a Marvel-Disney marriage. Disney shares closed at $26.84 on the last day of trading before the deal was announced, but at midday yesterday they were changing hands at $28.77.
