Disney's Pixar Buyout A 'Near-Perfect Strategic Fit'

(Forbes) – Merrill Lynch research analyst Jessica Reif Cohen maintained a "buy" rating and $31 price target on The Walt Disney Co. after the media giant said it would acquire Pixar Animation Studios for $7.4 billion in an all-stock deal announced late Tuesday. "We view the Disney-Pixar combination as a near-perfect strategic fit," wrote the analyst in a research note Wednesday. "Pixar's content meshes well with Disney's brand and is an important cog in its theatrical/home video distribution, theme parks and consumer products divisions." Still, the analyst estimates that the acquisition will be 3% dilutive to Disney's fiscal 2008 earnings, a more conservative estimate than that of Disney, which estimates that the acquisition will be accretive by that time. Reif Cohen maintained a $31 price target on Disney shares. "The Pixar acquisition filled a major strategic gap for Disney and reinforces the company's commitment to focus its resources on content production," she said. "Given the strength of its assets, we have confidence Disney can continue to demonstrate significant growth over the longer-term."