Pixar buzz animates stock
Wall Street keen on acquisition rumors
Most industryites consider it unlikely, but rumors persist on Wall Street that Walt Disney Co. may acquire Pixar.
Without uttering a word about the possibility, Steve Jobs added fuel to the fire Nov. 8 when, in a conference call, he said negotiations over a new distribution deal with Disney were going longer than expected and might not close until the end of the year -- as opposed to this month, as previously expected. (If Pixar ends up going to a new studio, that deal might not close until early next year.)
With talks on hold until "Chicken Little" opened last weekend, and the solid but not huge $40 million gross the pic posted not giving either side an advantage, the delay didn't seem particularly meaningful.
But on Wall Street, where rumors that Disney could buy Pixar have floated for months, some attributed the delay to more detailed talks necessary for an acquisition deal.
According to an analyst who tracks both companies closely, that was the main reason Pixar stock shot up 10% on Nov. 9 after the company only modestly beat guidance in Q3 earnings.
Given Pixar's current capitalization of close to $7 billion, Disney would likely have to shell out at least $8 billion to buy the animation company.
In return, all Disney would get is the 50% of returns it currently doesn't receive for films that are already made, and all revenue from future pics. However, it's questionable whether top Pixar talent would stay under Disney, and if pics would be as high quality and profitable.
Wall Street has a history of viewing Hollywood -- and particularly the animation biz -- very differently from the way the biz views itself. Most industryites were baffled after Memorial Day, when investors considered $61 million to be a weak holiday opening for "Madagascar" and drove DreamWorks Animation stock down 9%.
