Mergers, Acquisitions and Divestitures

Mickey Meets Spider Man The Disney-Marvel Merger Lawsuit

Spider Man, Iron Man, X-Men and Captain America are moving over to Disney. In August (2009), The Walt Disney Company announced that it wants to buy Marvel Entertainment, Inc., the comic company, for $4 billion.

Disney won't just control Marvel itself, but the rights to more than 5,000 Marvel characters. Disney will now get profits from every movie or game based on these characters, including Silver Surfer, Wolverine and The Incredible Hulk. This lets Disney expand its reach to a new part of the population.

This deal may be the biggest jolt ever to hit the comic book industry.

The Deal

The deal was structured as a stock and cash transaction. Disney would pay Marvel shareholders $30 per share, plus approximately 0.745 Disney shares for each Marvel share they own, based on the closing price of Disney on August 28, 2009.

The Fans

The media, businessmen and comic lovers were all very happy about this deal. Stan Lee, comic book writer and former president of Marvel, reported that the merger was a win-win for both sides. "I think it's a terrific deal which will be extremely beneficial to both companies. The synergy between them is perfect."1 According to Lee, the strengths of each company fits well with one another. "Nobody can produce and market franchises better than Disney, and nobody has the extensive library of characters that would make great franchises that Marvel has."2

The Opponents

Not everyone was happy with the purchase. As soon as the deal was signed, lawsuits were filed. One Marvel shareholder sued alleging that Marvel's directors failed to conduct the appropriate sales process and breached their fiduciary duty. The shareholder, Christine Vlatos, is seeking a court order stopping the deal as well as unspecified damages.

What Is a Shareholder?

A shareholder is a person or company that owns at least one share in a corporation. A shareholder has certain privileges such as a right to vote on elections involving the board of directors and the right to share in the company's income. Shareholders have the potential to profit when the company is successful. Likewise, if the company is not earning a profit, the shareholders can lose their investment as the price of his or her share is reduced.

What Is a Board of Directors?

The Board of Directors is comprised of directors who serve as the policy managers of a corporation. After they are elected by the shareholders, they get to choose the officers of the corporation, set the basic policy and make important decisions regarding the company.

Because directors are in control of other's property - the shareholder's investments - their powers are derived from state law and they owe the shareholders a fiduciary duty.

What Is a Fiduciary Duty?

A fiduciary duty imposes the highest duty in law on the person holding the duty - called the fiduciary - to act for the sole benefit of the beneficiary. Typically, a fiduciary duty exists in relationships such as agent to principal, lawyer to client, trustee to beneficiary, business partner to partner and director to corporation. In all of these situations, a fiduciary duty exists because the fiduciary has assumed a position, and taken on a responsibility, in which the beneficiary's interest is dependent upon the fiduciary's actions.

Fiduciary Duties of Board of Directors

Every director owes a legal duty of good faith, full disclosure, fair dealing and undivided loyalty to the corporation and must not do anything that is unfair to the corporation. A violation of this duty typically occurs when directors self-deal to their own benefit and to the detriment of the corporation.

Directors must also act in the best interests of the corporation and its members or stockholders. That means that in the case of a merger or purchase, the directors have an obligation try to get the best possible price for their shareholders.

However, courts do not specify exactly what directors have to do to prove that they satisfied their duty and tried to get the best price.

The Lawsuits

Marvel's shareholder, who is seeking a court order barring the deal as well as unspecified damages, is unlikely to succeed. These types of lawsuits are rarely won. However, another lawsuit has been filed.

The second lawsuit is a class action lawsuit, comprised of several Marvel shareholders. This lawsuit is also based on breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover. The basis of this lawsuit is that "the transaction appear[ed] to be unfair" to current investors of Marvel "by failing to conduct an open and fair auction process for the Company in order to maximize shareholder value."3

Because the class action involves many shareholders, it's more serious and may create future problems with the merger. Stay tuned for any updates related to this merger.


1 Michael Avila, Stan Lee Sees Disney-Marvel as a Super Deal,, Sept. 1, 2009, available at, accessed Oct. 2, 2009.
3 Marvel Entertainment Shareholder Lawsuit webpage, available at, accessed Oct. 2, 2009.

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