Rumor: Disney to buy Pixar, Apple? Jobs succeeds Eisner?

Rohit Khare (
Wed, 17 Feb 1999 09:04:10 -0800

[Given that Disney already bought off most of ATG's luminaries... :-]

Rumor: Disney to buy Pixar, Apple? Jobs still CEO?
By AppleInsider Staff (
February 16, 1999

PUBLISHER'S NOTE: Readers and industry executives came forward
yesterday to say that the rumor presented was just that, a rumor.
Please heed the various disclaimers, as the following account has
very little factual basis.

Well, rumors abound, and they never seem to end. Over the past few
weeks we've been following what would have previously been labeled as
highly improbable or even "out there," but one source over the last
few days has provided enough details on this unfolding story to merit
our attention. To call this anything but a rumor would be naive. The
following report is based on an account from a single trusted source
over the past few weeks.

Rumors of an Apple-Disney partnership have circulated the Web for as
long as we've been publishing, but we have never--until now--received
any compelling details or evidence to justify printing the buyout
rumors here. However, this story we've been following may provide the
missing link.
Steve Jobs incorporated Pixar computer animation studios in 1986 and
since then Pixar has enjoyed tremendous success with its first motion
picture release, ToyStory, and then with the recently released A
Bug's Life. Much of its success--financial and otherwise--has been
due to its relationship with Disney.
Pixar first parterned with Disney in an agreement in which Disney
would produce interactive CD titles for Pixar. Soon after, Pixar
joined Disney in a film partnership that has since shown great
success and financial rewards for each company. Due to the projected
success of A Bug's Life, Disney CEO Michael Eisner and Jobs were
reportedly in negotiations at one point to extend the five-film
agreement to eight or ten films, at which point Jobs apparently
mentioned something about the possibility of a Pixar buyout to Eisner.

That's all she wrote...
Using the same powers of persuasion that led Apple to buy NeXT, Jobs
was reportedly able to convince his longtime friend, Eisner, and the
rest of Disney's Board to consider a buyout of Pixar.
According to our source, Jobs was able to 'sell Apple' by presenting
it as the key to developing cutting-edge technology and the computing
innovation necessary to bring it to the masses--leveraging Apple's
strength in QuickTime and its growing influence in the consumer space.
While our source only speculated on the strategic importance of
Disney's acquisition of Apple, a closer relationship with Pixar would
be beneficial for future projects. Jobs's leadership and charisma
would certainly give Disney a unique position in the entertainment
industry. Of course, as a respected industry visionary, Jobs has more
up his sleeve than most could even imagine.

Details, Details, Details
By the end of the week, and possibly even today, Disney, Apple, and
Pixar may announce what will amount to be a three-way multibillion
dollar, multi-company, mega-merger in which Disney would acquire both
Pixar and Apple.
The agreement also reportedly calls for both Apple and Pixar to
become independent divisions within Disney. This would allow Disney
to leverage the strong Apple brand name in an effort to get
technology into the hands of the mass market.
As part of the agreement, Jobs would become CEO of Disney, effective
June 7th, 1999. Jobs would be charged with leading Disney, the new
Pixar-based interactive studios division (headed by John Lasseter),
and the Apple computing/technology division. Michael Eisner, who has
been preparing to step down as CEO of Disney due to health concerns
(originally prompted by a heart attack a few years ago), would
reportedly remain the Chairman of Disney's Board of Directors.
Money, Stock, Compensation
According to sources, the deal will be completed in a stock swap
worth more than $12 billion dollars (at current market estimates),
with no cash exchanged. Both Apple and Pixar shareholders would
receive Disney stock in exchange for their current holdings. Although
the exact amount may vary with current market prices, estimates are
that Disney will pay out nearly $7 billion in stock for Apple. (AAPL
is currently valued at 37 11/16 as of 02/15).
Jobs reportedly stands to gain as much as $5 billion in Disney
stock-- which can be attributed to his significant stake in Pixar.
His stake, which amounts to more than 60 percent of the company is
currently valued at $1.3 billion. But more importantly, Jobs will be
in the ultimate position to guide, shape, and create a vision for
technology and people around the world.

Where to go from here...

While more details of the agreement were not immediately available,
at least two sources have confirmed that Jobs and many members of the
Apple Executive team have spent much of the past 10 days at Disney's
headquarters in Burbank, California, working on the details of this
landmark agreement.
It seems clear that Disney has a lot to gain from having Pixar in
house, particularly given the close relationship between the two.
Although the specific strategic importance of Apple to Disney is
still unclear, Apple's leadership in the creative markets and strong
brand name in the computer industry can surely help Disney achieve
its overriding objective "to create shareholder value by continuing
to be the world's premier entertainment company from a creative,
strategic, and financial standpoint. "
The addition of Pixar into the Apple-Disney equation helps put
together some of the puzzle pieces which have floated around without
any logic or rationale; and may provide the missing link that would
bring Jobs, Apple, and Disney together.
More details Coming "very soon"
As our source suggested, this is probably closer to reality than any
other buyout rumor yet circulated and may, in fact, surface in
today's editions of major mainstream publications.
With the Disney shareholder meeting quickly approaching (next week,
February 23rd), Apple's somewhat low-key (and premature), release of
its highly touted Java Virtual Machine, MRJ 2.1, and Jobs's expected
keynote at Macworld Expo Tokyo '99 on Wednesday night (Eastern
Standard Time), we expect details on the emerging deal--confirmation
or otherwise-- to surface very quickly.
If true, this would be a momentous turn in the evolution of the
computer industry, as all three companies will be poised to change
the future of computing, interactivity, and entertainment using
cutting edge Apple technology.
Note the numbers outlined here may vary substantially with market
conditions, may depend on the day any agreement would be executed,
and may reflect uncertainties with regards to ongoing negotiations.