Company Acquisitions

1. Company Acquisitions Isaac Hill Nicholas Biancuzzo Adam Luehmann Jocelyn Bykowski

2. 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

3. 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

4. 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

5. 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.

6. 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

7. 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

8. Merger Agreement • George Lucas sole owner of Lucas Films • Consideration ($4.05 billion) • Half in cash • Half in stock.

9. Stock consideration • Stock Amounts • About 37,000,000 • $53.77 a share

10. Merger Customary conditions • Obtaining clearance • Sherman Antitrust Act • Clayton Antitrust Act • Hart-Scott-RodinoAntitrust Improvements Act • certain non-United States merger control regulations • http://www.ftc.gov/bc/hsr/introguides/guide1.pdf

11. 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

12. 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

13. 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

14. Employee Experience • Estimated over 500 employees. • Valuable work experience • New Ideas • George Lucas – Creative Consultant • Lucasfilm’s Employees

15. 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

16. Consumer Products • Lucas Licensing • Clothes • Toys • Video Games • Movies • Books

17. 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

18. 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

19. Previous Disney Acquisitions

20. 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

21. 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

22. 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

23. 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