Isaac Hill

Nicholas Biancuzzo

Adam Luehmann

Jocelyn Bykowski

COMPANY ACQUISITIONS

ACQUISITION LAW

• Several Federal regulations limiting mergers to prevent a monopoly

• Sherman Anti-Trust Act of 1890

• Clayton Anti-Trust Act of 1914

• Hart-Scott-Rodino Antitrust Improvements Act of 1976

• Procedure to accomplish a corporate merger are established by individual States

• Procedures can vary from State to State but in general are fairly similar

ACQUISITION LAW

• California Law

• Title 1, Division 1, Chapter 11

• Board of each corporation must approve the merge

• Agreement must state:

• Terms and Conditions of merger

• Amendments

• Name and place of each corporation and which is the surviving corporation

• Manner of converting shares of the corporations into shares of the surviving corporation

• Other details or provisions as desired ex: cash in lieu of fractional shares

LAW, CONT.• Agreement must be signed by

• Chairman of board

• President

• Vice President and Secretary

• Vice President and Assistant Secretary

• Surviving company assumes the liabilities of disappearing companies

• Many of the regulations differ if you are merging with a foreign corporation

• If transferring property a copy must of the agreement must be filled at county where the property located

• Votes needed to approve a merger vary depending on what type of corporation is disappearing and what type is surviving

FOR REFERENCE

• In total California Corporate Code has 18 different areas where mergers are discussed.

• Title 1 Division 1.5 Chapter 8, Title 1 Division 2 Part 2 Chapter 10 and both articles under Chapter 10, Division 2 Part 3 Chapter 10 and its articles, Division 2 Part 4 Chapter 6 Article 4, Division 3 Part 2 Chapter 10 Article 1&2. Title 2 Chapter 5 Article 9, Title 2 Chapter 5.5 Article 11, Title 2.5 Chapter 12, Title 2.6 Article 10. Title 3 Part 1 Chapter 6 Article 5. Title 4 Division 3 Chapter 9.

PRE-WORK

• Conduct a Merger & Acquisition Audit

• Examination of internal capabilities for integrating information systems, operations, sales, and corporate cultures

• Helps identify weakness and gaps to fill before a merger

• conduct comprehensive financial due diligence

• From Merger and Acquisition Readiness an article from Crowe Horwath LLP, a public accounting and consulting firm http://www.crowehorwath.com/folio-pdf/PERF11902_MAIntegrationReadinessWP_lo.pdf

WHAT IGER DID

• Bob Iger is President and Chief Operating Officer of Disney

• Talked to Lucas about his willingness to sell

• Looked into intellectual property about planning and thought for Star Wars (what had already been thought up. eg: characters, planets, stories)

• Highly likely he examined financial statements and assets of Lucasfilms and its subsidiaries though no source expressly stated this

MERGER AGREEMENT

• George Lucas sole owner of Lucas Films

• Consideration ($4.05 billion)

• Half in cash

• Half in stock.

STOCK CONSIDERATION

• Stock Amounts

• About 37,000,000

• $53.77 a share

MERGER CUSTOMARY CONDITIONS

• Obtaining clearance

• Sherman Antitrust Act

• Clayton Antitrust Act

• Hart-Scott-Rodino Antitrust Improvements Act

• certain non-United States merger control regulations

• http://www.ftc.gov/bc/hsr/introguides/guide1.pdf

COVENANTS

• Covenants of Lucasfilm (W-8)

• To conduct its business in the ordinary course

• Covenants of both Disney and Lucasfilm (W-8)

• Cooperation on seeking regulatory approvals

• Access to each other’s information

COVENANTS

• Lucasfilm has also agreed not to

• (i) Propose other combination transactions

• (ii) Enter into discussions for alternative business combination transactions.

• The Merger Agreement contains termination rights for both parties

• If the parties consent to termination

• If the transaction has not closed within six months

• If the transaction is prohibited

• If the other party breaches certain agreements

WHAT DISNEY ACQUIRES• Intangibles

• Employee Experience

• Greater Consumer base

• Tangibles

• Consumer Products

• Visual Effects

• Audio Post-Production

• http://www.businessweek.com/articles/2013-03-07/how-disney-bought-lucasfilm-and-its-plans-for-star-wars

EMPLOYEE EXPERIENCE

• Estimated over 500 employees.

• Valuable work experience

• New Ideas

• George Lucas – Creative Consultant

• Lucasfilm’s Employees

GREATER CONSUMER BASE

• Tapping into a huge consumer base

• Greater share of the market

• (Star Wars Series)

• Over $4.2 billion box office gross

• Over $3.7 billion in DVD sales

CONSUMER PRODUCTS

• Lucas Licensing

• Clothes

• Toys

• Video Games

• Movies

• Books

VISUAL EFFECTS

• Industrial Lights & Magic

• Has created visual effects for over 300 feature films

• Computer generated characters in Transformers, and Jurassic Park

• Well versed in Blue-screen photography

• “Today, ILM features the largest and most advanced digital effects pipeline in the entertainment industry”- Lucasfilm Ltd.

ILM Video

AUDIO POST PRODUCTION

• Skywalker Sound

• Helps clients in fulfilling their post-production needs.

• Feature Films, Commercials, video games, television

• Has 6 mixing studios

• 18 academy awards

PREVIOUS DISNEY ACQUISITIONS

PREVIOUS ACQUISITIONS

• Disney drawn to ABC for highly creative culture committed to developing and distributing original and innovative programs

• Will help Disney globally to combine with ABC networking

• Pixar was a rival

• If Pixar would merge with a rival, it could be devastating

WHY MERGE?

• Deploys capital towards enhancing the portfolio of its globally recognized brands in order to drive long-term growth.

• Strong, recognizable global brand

• Maximize the value

• One of the best selling licensed character merchandise brands in the U.S. and around the world - See more at: http://thewaltdisneycompany.com/disney-news/press-releases/2012/10/disney-acquire-lucasfilm-ltd#sthash.r9SpRXtO.dpuf

• In 2012, Lucasfilm's consumer products business was expected to generate total licensing revenue that is comparable to the roughly $215 million in consumer products revenue Marvel generated in 2009 - See more at: http://thewaltdisneycompany.com/disney-news/press-releases/2012/10/disney-acquire-lucasfilm-ltd#sthash.r9SpRXtO.dpuf

CONCLUSION

• Acquisitions help companies expand and diversify (in the case of Disney)

• Disney demonstrates a positive acquisition with Lucasfilms, among their other acquired companies

• Disney is now on the road to success with the release of the new Star Wars Episode in 2015

• Mergers are everywhere, we must understand how to use them

APPENDIX• http://

www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=01001-02000&file=1100-1113

• http://etseq.law.harvard.edu/2012/11/disneys-purchase-of-lucasfilms/

• http://www.sec.gov/Archives/edgar/data/1001039/000119312512441509/d429302d8k.htm

• http://finance.yahoo.com/news/disney-buys-lucasfilm-233858949.html

• http://www.hollywoodreporter.com/thr-esq/power-lawyers-how-star-wars-527383

• http://thewaltdisneycompany.com/disney-news/press-releases/2012/10/disney-acquire-lucasfilm-ltd

• http://www.lucasfilm.com/divisions/ilm/

• http://www.lucasfilm.com/divisions/licensing/.

• http://www.skysound.com/.

• http://www.nytimes.com/1995/08/01/business/media-business-merger-walt-disney-acquire-abc-19-billion-deal-build-giant-for.html?pagewanted=all&src=pm

• http://legal-dictionary.thefreedictionary.com/Mergers+and+Acquisitions

• http://www.the-numbers.com/features/starwars.php

• http://www.statisticbrain.com/star-wars-total-franchise-revenue/

• http://www.justice.gov/atr/public/divisionmanual/chapter2.pdf