LESSON 3 ENTRY MODES 5 Companies Owned By Facebook • Instagram Type of Business: Photo and video-sharing app Acquisition Cost: $1.0 billion Acquisition Date: April 9, 2012 • Oculus VR Type of Business: Virtual reality technology company Acquisition Cost: $2.0 billion Acquisition Date: March 25, 2014 • Onavo Type of Business: Mobile web analytics Acquisition Cost: $100–200 million (estimated) Acquisition Date: October 2013 • Beluga Type of Business: Messaging service Acquisition Cost: Undisclosed Acquisition Date: March 2, 2011 • WhatsApp Type of Business: Mobile messenger service Acquisition Cost: $19.0 billion Acquisition Date: February 19, 2014 #1: Walt Disney Co. and Pixar Our first merger example comes from the world of entertainment. In 2007, the Walt Disney Company acquired Pixar Entertainment for a price of $7.4 billion. This is a merger that makes sense at every level. Disney has been the biggest name in family entertainment for decades, creating classics such as Cinderella, Mary Poppins, and The Lion King. Pixar was a newer entry on the market, but made a huge impact with its beloved films Toy Story and Finding Nemo. The synergy between the two companies was apparent even to casual observers. The merger allowed Disney to consolidate its brand as the biggest provider of family-friendly films and it allowed Pixar to greatly increase its production process and release two new films per year. The post-merger Pixar films, including Up and WALL-E, have #2. eBay and PayPal eBay was the world’s biggest online auction site when it acquired digital payment provider PayPal in 2002. Its goal was to facilitate online payments on eBay, making this corporate marriage the perfect vertical merger example. The merger led to growth for the merged companies, with stocks rising dramatically in the aftermath. We do think it’s important to note that eBay spun off PayPal as a separate company in 2004 on the demands of investors, but there’s no question that the merger helped eBay solidify its reputation and its stock has continued to see modest growth while PayPal’s stock has increased rapidly.
