Disney to acquire Marvel in $4 billion deal

Tue Sep 1, 2009 8:43am EDT
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By Paul Thomasch and Gina Keating

NEW YORK/LOS ANGELES (Reuters) - Walt Disney Co on Monday agreed to buy Marvel Entertainment Inc for $4 billion in the year's biggest media deal, banking on Marvel's pantheon of superheroes to broaden its lineup of movie franchises that appeal to boys.

Disney adds Spider Man, Iron Man and Thor to its roster of classic characters like Mickey Mouse and Snow White, and will feature the super-heroes in movies before rolling out associated theme park rides, TV shows and merchandise.

But the deal comes at a tough time in the entertainment business, with advertisers avoiding spending on new campaigns and consumers cutting back on everything from DVDs to travel.

The deal is also expensive. It values Marvel at 37 times its estimated 2009 earnings, and offers shareholders a 29 percent premium to Friday's closing price. Standard & Poor's reacted by placing Disney's credit rating on its negative watchlist, saying it may need to issue new debt even as earnings stagnate or fall in the recession.

But the risk of overpaying did not deter Disney from seeking out a deal to address an area of concern among investors: How can it 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 at Miller Tabak & Co.

Disney has long been a blockbuster brand with girls thanks to characters such as "Hannah Montana," "Cinderella" and "Snow White," but has struggled to achieve the same kind of success with boys.

Movies including "Iron Man 2," the sequel to the smash hit about a billionaire playboy with a high-tech suit of armor due to hit theaters in 2010, or 2011's "Spider-Man 4" and "Avengers", should help resolve that issue.   Continued...

<p>A man puts on a Spider Man outfit to promote the Hollywood blockbuster 'Spider-Man 2' in Shanghai, August 2, 2004. REUTERS/China Photos</p>