Yesterday The Walt Disney Co (NYSE: DIS) took a nosedive of almost 3% on the news that they were going to purchase Marvel for $4 billion. Analysts believed that Disney had overpaid for the company – one just downgraded by JPM.

After all, when they picked up Pixar they paid only a 4% premium, while for Marvel they ponied up a 29% premium. Did Disney overpay for Marvel?

Absolutely not.

As Disney opened slightly positive this morning, the street may be coming to their senses. Rest assured, in a short period of time it will become apparent that Disney made another masterful move of picking up this classic character franchise.

While new character creations hit the markets and TV screens every year, some are timeless and iconic – Marvel has these. Imagine the income on just one more mega-hit Ironman movie, or another classic character from Marvel’s vaults.

Disney has been suffering from it’s inability to create new characters that have the same appeal as their older ones. Instead of beating a dead horse, they’ve been smart enough to pick up as many new characters – already beloved – as they can.

With Disney’s distribution and brand protection, they can leverage characters better than anyone. This move shows that Disney sans Eisner can be successful and, we suspect, very profitable.

View Source: InvestmentU

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