Disney buying Pixar for $7.4 billion in stock

LOS ANGELES — The Walt Disney Co. said Tuesday it is buying longtime partner Pixar Animation Studios Inc. for $7.4 billion in stock in a deal that could restore Disney's clout in animation while vaulting Pixar CEO Steve Jobs into a powerful role at the media conglomerate.

Disney's purchase of the maker of the blockbuster films "Toy Story and "Finding Nemo" would make Jobs Disney's largest shareholder. Jobs, who owns more than half of Pixar's shares and also heads Apple Computer Inc., will also join Disney's board.

"With this transaction, we welcome and embrace Pixar's unique culture, which for two decades, has fostered some of the most innovative and successful films in history," Disney Chief Executive Robert Iger said in a statement.

Disney has co-financed and distributed Pixar's animated films for the past 12 years, splitting the profits. But that deal expires in June after Pixar delivers "Cars" and it had once appeared the companies would not renew it amid friction between Jobs and former Disney CEO Michael Eisner.

But the talks revived under Iger. Disney, the theme park owner that also owns the ABC and ESPN TV networks, and Pixar have been talking for months about a new relationship.

Pixar Executive Vice President John Lasseter will become chief creative officer of the animation studios and principal creative adviser at Walt Disney Imagineering, which designs and builds the company's theme parks.

Pixar President Ed Catmull will serve as president of the new combined Pixar and Disney animation studios, reporting to Iger and Dick Cook, chairman of The Walt Disney Studios.

"Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders," Jobs said in a statement. "Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world."

Under the deal, Disney said it will issue 2.3 shares for each share of Pixar stock. At Tuesday's closing price of $25.99 for Disney, Pixar shareholders would get stock worth $59.78, a 4 percent premium over Pixar's closing price of $57.57. The deal was announced after the markets closed for the day,

With Pixar, Disney gains a company that has produced a long-running string of animated blockbusters. Iger wants to strengthen Disney's animated features, the hallmark of the company since its founding and a steady source of characters for Disney's theme parks and other units.