On December 31, 2009, The Walt Disney Company acquired all the capital stock of Marvel Entertainment Company. Marvel has created heroes such as Spiderman, the Hulk, and Iron Man.
Disney acquired 79.2 million shares of Marvel Entertainment’s shares. Disney issued 59 million shares of Disney stock plus $30 for each share of Marvel Entertainment stock.
Disney stock, which has a par value of $0.01 per share, had a market value of $32.25 per share. The estimated fair value of Marvel Entertainment accounts were as follows:
Cash and cash eqivalents ............ $ 105,000,000
Receivables .................. 141,000,000
Capitalized film costs .............. 269,000,000
Intangible assets ............... 3,140,000,000
Accounts payable .............. (325,000,000)
Other liabilities* ............... (83,000,000)
Deferred income tax liability ......... (1,121,000,000)
*Other liabilities was actually a noncontrolling interest which is actually an equity interest that is discussed in Chapter 2.
Required
1. Using the Federal Trade Commission’s classification of merger types, how would you classify the acquisition?
2. Calculate the total price paid for Marvel Entertainment. Is there goodwill or a gain?
3. Record the acquisition.