Walt Disney is an international leading family entertainment company that has five segments of business (Slide, 1998). The segments are media networks, interactive media, parks and resorts, consumer products and studio entertainments (Booker, 2011). In 2011, it was estimated to be over $40 billion in worth. Lucas film, on the other hand, is a fully integrated family entertainment, which is privately owned by George Lucas. The company’s activities are television production, motion picture, industrial light and magic, and Skywalker sound. Walt Disney Company agreed to acquire Lucas Film Company in stock and cash basis.
The main circumstances that resulted to the acquisition of Lucas film by Disney were several. The first circumstance was that, Disney would attain the Lucas film ownership, a leader in innovation, entertainment and technology. This included the Lucas films’ most popular and evergreen Star Wars franchise and its working businesses. The second condition for the acquisition was that Disney to acquire a significant portfolio of the best entertainment technologies that have kept audiences for many years (Barrier, 2007). The employees of the Lucas film company, which is headquartered in San Francisco, were to remain in their current location. Lucas Film’s Kathleen Kennedy was, however, to be the vice chair of the Lucas film reporting to the chair of Disney, Alan horn.
The main reasons why Disney acquired Lucas film were to gain a bigger market share than before and to increase its capabilities. As for the market share, Disney had a larger market share internationally. Lucas film was only dealing with toys and North America only. Lucas film wanted to become worldwide too and so by merging with Disney, its products would start selling internationally. Disney would also be advantaged with the Lucas films’ products, as it would increase the products it is selling. Disney Company is a worldwide company, and it would benefit both itself and the Lucas film by expanding its market share. Initially Disney only had five segments of business, but by acquiring Lucas film’s products, it increased its capabilities (Barrier, 2007). There were new products being introduced to the company and this meant that there was a wider variety for people than it was before acquisition.
Disney benefited so much in the acquisition of Lucas Film Company. This is because the company had just acquired a company that had already flourished for over 35 years. Lucas Film Company had a franchise of Star Wars, which continually, offered limitless characters that drive stories and film releases over a long time. This film releases have strengthened the growth of the franchise for a long time. Star Wars boom more customers around the universe and so it gives Disney extensive opportunities to deliver their products across its wide portfolio of businesses. Disney would benefit so much with the franchise of Lucas Film because it is ranked top in the world’s product brands. Star Wars have received $4.4 billion on the global box and has continued to hold a high demand of the global market. It is an added advantage for Disney to acquire the company’s franchise since it will not have a hard time to sell its products. Through Star Wars, Lucas Film Company has already gained a huge demand in the global market.
Lucas film franchise provides a source of high quality, a recognized content of appeal that is liked worldwide and suited well for new businesses. This is very important for Disney, as it needs a character like that in the business for continued growth. The acquisition also merges two entertainment companies that have an existing relationship hence strengthening it. By the acquisition of the Lucas Film, Disney strengthens its content worldwide.
Lucas film also follows to the acquisition of Pixar and Marvel by Disney, which shows that the company had a unique ability to enlarge it financial ability. Walt Disney has a high portfolio of quality brands, and adding Lucas film, has even created a wider market share for Disney. Lucas film is also known globally, but with the help of Disney, it will even be known more. This will promote the company’s capability to serve customers with a wide variety of the global high quality content. It will also create an extra value for the shareholders of Disney Company.
The organizational structure of the Disney Company and the Lucas film Company also fueled the acquisition process. The Disney Company has a very strong organizational structure that has helped it acquire Lucas film’s Company. The company’s CEO is Robert A. Iger, and the owner of the Lucas film company is George Lucas. Disney Company is a corporation of companies that make a firm company without a specific owner. Disney Company has become strong and big due to merging and acquisition of other companies. Disney Company and Lucas film Company had a strong relationship that goes back. This has eased the acquisition of Lucas film Company by Disney. George Lucas had enough confidence to entrust his company to Disney.
The acquisition builds on the relationship foundation and puts together two of the best family entertainment products globally. Disney understands about the iconic characters, and its brands are compatible with Lucas film hence a better choice of acquisition by George Lucas. He also trusted Disney because of its strategic priorities.
When a company acquires another, they become one company. The difference between the resulting company and the other two is that one of them will have most shares than the other. In this case, Disney has more shares than Lucas Film Company. The Chairperson of the company goes to the company with the most shares. Disney’s, Alan Horn became the chairperson while the vice chair was Kathleen of the Lucas film. The other difference between the prior two organizations and the resulting one is that the products produced became more. This is because Disney Company had five business segments and after the acquisition, there were more products from the Lucas film Company. The other difference between the two independent organizations and the resulting organization after the acquisition is the increase in the market share. The merging of Disney and Lucas film companies increased the market share of both since there were many products to be sold globally.
The human resources management practices were modified to reflect the outcome of the acquisition. This is because products that were running in Lucas film Company had to have some personnel from the company to continue running in Disney. This is shown where the vice chair of the merged company became the brand manager of the Star Wars products. She would be directly dealing with the products of the Star Wars working directly with global lines of Disney. She would also be the executive producer of the Star Wars films with the owner of Lucas film Company serving as the creative consultant. This shows that the human resources management had to adjust and include other personnel in their schedule (DePamphilis, 2010).
Psychologically, the employees of Disney Company were more relaxed and had their jobs secured while the employees of Lucas film Company had insecurities with their jobs. This is because a bigger company was acquiring a smaller company hence; the employees of the smaller company feel they are losing their job. The human resource, therefore, should accommodate the workers that are needed. There is supposed to be more jobs since the acquired company is bringing along more work and so, more employees are needed to do the job.
In conclusion, the acquiring company benefits more that the acquired company. In this case, Disney Company benefited more than Lucas film Company. This is because the products of the Lucas film Company were sold to them and they were making profits out of them. This is shown where Disney bought the Lucas Company with $4.05 billion where fifty percent was cash and fifty percent stock. Although the acquired company also gained market share, more of the profits went to the acquiring company. The C.E.O states that the shares that have been sold to Lucas film Company at the current rate will be bought two years down the line. This will mean that Disney will take Lucas Film Company completely. Disney Company gained in acquiring the company because it increased its competitive advantage over the other companies globally.
Barrier, J. M. (2007). The animated man: A life of Walt Disney. Berkeley: University of California Press.
Booker, M. K. (2011). Historical dictionary of American cinema. Lanham, Md: Scarecrow Press.
DePamphilis, D. M. (2010). Mergers, acquisitions, and other restructuring activities: An integrated approach to process, tools, cases, and solutions. Burlington, MA: Elsevier/Academic Press.
Slide, A. (1998). The new historical dictionary of the American film industry. Lanham, Md: Scarecrow Press.