Toy and Licensing Community Buzzes as Disney Announces Acquisition of Marvel

ImageSeptember 1st, 2009 | Mickey Mouse and Iron Man joined together in the same family when The Walt Disney Co. announced on August 31, 2009, that it will purchase Marvel Entertainment Inc. for $4 billion in cash and stock.  Under the deal, which is expected to close by the end of the year, Disney will acquire the rights to 5,000 Marvel characters.

Many of the characters – including the Fantastic Four and the X-Men – were co-created by comic book legend Stan Lee.  “It’s the greatest thing that could happen to both companies,” Lee told USA Today.

“The deal makes perfect sense,” agreed Reyne Rice, toy trend specialist, TIA. “Both Disney and Marvel are responsible for so many of the hot properties and prominent characters that are in the marketplace today.  This is huge news for the toy industry.”

The acquisition will strengthen Disney’s boy’s portfolio for both younger boys and to the action figure collector (usually males ages 13 up through adults).

“The deal shores up Disney’s relative weakness in the boys’ area,” said Sean McGowan, toy industry analyst, Needham & Co.  “And from Marvel’s standpoint, it’s a good price that allows them to monetize upon what they have built upon in the last few years.”

ImageBoth companies have used story-telling to build upon iconic characters for generations and generations.  Disney has a long-revered strength of using beloved characters and stories to build their brands. Marvel’s characters also have complex storylines and deeply entrenched histories, built over the 70 years of Marvel comics business. 

The strength of these characters has translated into many licensing deals for the toy industry with both Marvel and Disney:

  • Mattel’s licensing deals with Disney for Princesses, Toy Story, Cars, and High School Musical have helped them bring these iconic characters to life in the toy box for kids around the globe.  
  • Hasbro has a long-term master toy licensing deal with Marvel Entertainment for the core action figures, action figures accessories, role play and games.  
  • Jakks Pacific manages the doll businesses for Hannah Montana, and Jonas Brothers and the large role play items for Disney Princesses and Fairies (through their CDI division).
  • The Disguise division of Jakks Pacific (acquired in late 2008) manages the Halloween character licenses for Marvel, Disney, Hasbro, and many of the core top 25 licensed properties.  
  • Toy manufacturers who are top players in their respective categories – including Leapfrog in educational learning products and Screenlife with Scene-It DVD trivia games – also have licensing agreements with Marvel.

“This is great for the companies who hold the toy licenses,” McGowan added. “It’s a positive thing for toy companies like Hasbro since Disney will be working hard to expand and exploit some of the lesser known Marvel characters.”

The acquisition will also help Marvel gain international exposure and expansion as part of the world’s largest entertainment company.  Disney’s global portfolio was measured at $38 Billion dollars for the past 12 months. 

Investors welcomed news of the acquisition by driving up Marvel shares by 25% to $48.37.

The Disney investor conference call will be available for replay through September 14 at 7 p.m. EDT.