The mergers and acquisitions market was virtually shut down by the credit crunch, but mounting confidence in credit and equity markets now seems to be spurring a revival.
The media sector alone saw two major deals this week. Disney bought Marvel Entertainment, the creator of Spiderman and the Incredible Hulk, for $4bn in cash and shares – a 30% premium to Marvel’s valuation last week. Online auction group eBay sold 65% of internet telephony group Skype to a group of private equity investors for $1.9bn.
What the commentators said
Worries that Disney is overpaying look overdone, said Rob Cox on Breakingviews. Note that it paid an even higher price for Pixar in 2006, but that proved a success as it revived the group’s “core animation franchise”. And there are ample licensing opportunities for Disney to exploit, noted Paul Thomasch on Reuters.com.
Marvel boasts a roster of 5,000 characters, and Disney will be able to use “its marketing and entertainment clout” – ranging from cable television and films to clothing and theme parks – “to promote and build characters… in ways Marvel never could”, given its smaller resources. This deal also fills a demographic gap for Disney. Few of its characters currently appeal to young boys; Marvel’s Iron Man and Captain America, however, do.
Ebay, meanwhile, isn’t expanding its horizons but rectifying a strategic error. It bought Skype in the hope that buyers and sellers would swap information telephonically and thus boost the auction business, said Robert Cyrano on breakingviews. But eBay’s customers proved far less chatty than expected, which essentially left management “dealing with an unrelated business”.
On the plus side, eBay is getting roughly what it paid, and the price is high at almost five times sales, said David Wighton in The Times. EBay is also keeping a 35% stake in the high-flying company, which Sandeep Aggarwal of Collins Stewart deems “another major internet business, just like Amazon”.
DIS: $25.70; 12m change -21%
EBAY: $21.70; 12m change -13%