Marvel Entertainment Inc. (MVL) said Thursday that its shareholders have approved the company's merger with Walt Disney Co. (DIS). The company anticipates the deal, valued at about $4.3 billion based on Disney's closing price on Wednesday, to be completed after the market close on Thursday.
With the deal, Disney will acquire ownership of more than 5,000 Marvel comic-book characters, including Iron Man, Spider-Man, X-Men, The Hulk and Captain America.
New York-based Marvel, a character-based entertainment and licensing company, said that in a special meeting held Thursday morning, its shareholders approved the adoption of the agreement and plan of merger entered into between both the companies. On Tuesday, Marvel had said that stockholders who owned its common stock at the close of business on November 23 are entitled to vote at the special meeting.
In August, Burbank, California-based Walt Disney said that it has agreed to acquire Marvel in a cash and stock transaction. Marvel is also part of a joint venture with Sony Pictures Entertainment Inc., called Spider-Man Merchandising L.P. related to Spider-Man movie related licensed products.
Under the terms of the deal, shareholders of Marvel will receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own. The companies had said that the amount of cash and stock will be adjusted if necessary at closing so that the total value of the Disney stock issued as merger consideration based on its trading value at that time is not less than 40% of the total merger consideration.
The boards of directors of both Disney and Marvel had approved the transaction, which required antitrust review and approval of Marvel shareholders.
The merger with Disney deal ends 70 years of independence for Marvel, which dates back to 1939 when New York magazine publisher Martin Goodman created Timely Publications. Timely eventually changed its name to Marvel, and for decades, it dominated the comic-book market, churning out character after character. During the 1960s and 1970s, Marvel rivaled Disney as an entertainment giant, selling 50 million comic books a year.
In the 1990s, Marvel ran into financial trouble amid the downturn in the comic-book industry. The company filed for Chapter 11 protection from creditors in 1996 and emerged two years later largely as a licensing company with 300 employees and less than $700 million in annual sales. The company later moved into the movie business and teamed up with studios to produce films featuring its superheroes. Last year, Marvel started producing its own films, hoping to keep more of the profits.
Marvel has met with thumping success around the globe with its movies. However, the global economic downturn that uprooted several businesses has also hurt the entertainment business. Marvel is now trying to be more vibrant, in the company of Paramount pictures, which would now distribute five of its movies, including Iron Man 2.
The acquisition of Marvel will help Disney appeal to young men who have flocked to theaters to see Marvel's superhero fare in recent years. Many of Disney's biggest successes - Hannah Montana, the Jonas Brothers, Cinderella - have been popular with girls, but Marvel's more edgy, violent characters have appealed to young men.
Robert Iger, Disney's President and CEO, has reportedly said that Marvel characters will have a place in Disney theme parks, although no specifics were revealed. Disney is also looking to not only cash in on making big screen adaptations of Marvel heroes, but also sees huge potential in television shows, video games and toys.
For Disney, the acquisition of Marvel is far smaller than its purchase of Pixar for about $7.4 billion in 2006.
In mid-November, Disney said that its fourth-quarter profit rose 18% from last year, helped mainly by strong results at its cable networks due to growth at ESPN and, to a lesser extent, the worldwide Disney Channels. The company reported net income for the fourth quarter of $895 million or $0.47 per share, compared to $760 million or $0.40 per share for the year-ago quarter. Revenue for the fourth quarter increased 4% to $9.87 billion from $9.45 billion in the same quarter last year.
On the other hand, Marvel in early November reported a large drop in profit for the third quarter, hurt by a decline in feature film activity and related licensing. The company's net income for the third quarter was $20.42 million or $0.26 per share, sharply lower than $50.63 million or $0.64 per share in the prior-year quarter. Net sales for the quarter dropped to $105.66 million from $182.50 million in the same period last year.
In Thursday's regular trading session, DIS is trading at $32.55, up $0.27 or 0.84% on a volume of 2.49 million shares. In the past 52 weeks, the stock has been trading in a range of $15.14-$32.75.
MVL is trading at $54.26, up $0.21 or 0.39% on a volume of 0.13 million shares. the stock has been trading in a range of $22.82-$54.39 in the past 52 weeks.
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