Disney Buys Star Wars for $4 Billion

You can add Luke Skywalker and Han Solo to the list of Disney heroes now. They join Iron Man, Buzz Lightyear, and others now that the Walt Disney Company has bought the Star Wars franchise from its original founder George Lucas, who owns Lucasfilm.

The official purchase took place on Oct. 30th after a year and a half of negotiating. The $4.1 billion sale is Disney’s fourth largest deal ever behind the $19.7 billion purchase of Capital Cities/ABC in 1995, the $7.6 billion buyout of Pixar in 2006, and the $5.2 billion pick up of Fox Family in 2001. The Star Wars investment tops that of Marvel in 2009.

Disney plans to pay half the value in cash and provide 40 million shares of Disney to pay for the rest. Lucas, who receives these shares, is the second largest non-institutional shareholder of Disney behind Apple co-founder Steve Jobs.

Although 68-year-old Lucas plans to retire, he will be a creative consultant until then. “For the past 35 years, one of my greatest pleasures has been to see Star Wars passed from one generation to the next. It’s now time for me to pass Star Wars on to a new generation of filmmakers,” said Lucas.

The 1977 original film eventually led to six more science fiction movies. Disney plans to restore the Star Wars franchise by releasing a seventh film in 2015. Disney intends to put out a new film every two to three years after that.

According to Disney’s CEO Robert Iger, the company takes Lucas’s legacy seriously, so they want to incorporate a larger Star Wars presence in the parks, which may lead to new parks. Since Lucasfilm is one of the greatest franchises of all time, Disney is hopeful that it will be able to retrieve the money to make more movies and add to theme parks.

The sale is beneficial to both sides of the deal. It allows George Lucas to keep his creation going and put it into good hands. “I’m doing this so that the films will have a larger life,” said Lucas. He also will be able to retire, which he has been planning to do for the past four to five years. Disney not only inherits the franchise, but also Lucasfilm’s live-action production business, its Industrial Light & Magic effects business, its Skywalker Sound operation, and its consumer products unit. Since Lucasfilm is based in San Francisco, the purchase, along with the previous Pixar pick-up from San Francisco, will give Disney a major presence in Northern California.

Iger earned Lucas’s trust as Lucas willingly put his legacy in Disney’s successful hands. There is a great respect for Lucas for being able to give up his company. He never had the intention to grow it, which is why he kept it based in San Francisco and was never a part of the big Hollywood scene. “This is one of the great entertainment properties of all time, one of the best branded and the most valuable, and it’s just fantastic for us to have the opportunity to buy it, run it, and grow it,” said Iger.