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Disney to Buy Lucasfilm for $4.05B, Plans New ‘Star Wars’ Films

George Lucas founded LucasFilm in 1971

Disney has purchased George Lucas’ Lucasfilm LTD for $4.05 billion, the two companies announced on Tuesday. As part of the deal, Disney will make at least three more "Star Wars" films, rebooting one of the most successful franchises in film history. 

Disney also acquires Lucasfilm's film production, consumer products, animation, visual effects and audio post-production divisions, as well as a number of revolutionary entertainment technologies. Disney will pay half of that sum in cash and the other half in stock, based on Disney's stock price at market close Tuesday.

Lucas, the legendary creator of “Star Wars,” founded Lucasfilm in 1971. The company has produced Lucas’ many high-profile projects, such as ”American Graffiti,” the “Star Wars” franchise and the “Indiana Jones” franchise.

“Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas," Bob Iger, Chairman and CEO of Disney, said in a statement. “This transaction combines a world-class portfolio of content including Star Wars, one of the greatest family entertainment franchises of all time, with Disney’s unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value.”

Here's a video of Iger and Lucas:

Lucas, co-chairman and CEO, has made clear in recent years that he plans to step aside and brought on Kathleen Kennedy, a long-time collaborator, as his successor in June.

Also Read: Kathleen Kennedy Joins George Lucas as Co-Chairman of Lucasfilm 

Kennedy will serve as president of Lucasfilm, reporting directly to Disney studio chief Alan Horn. Kennedy will also executive produce the new "Star Wars" film while Lucas will serve as a creative consultant.

"Four to five years ago George started contemplating retirement and put in motion that process," Iger told analysts. "He and I started talking about this a year and a half ago. Only recently we decided it was something we really wanted to do."

Disney has excelled at creating films and characters that it can turn into global brands, such as animated characters like "Finding Nemo" and the Marvel superheroes. Its theme parks and consumer products division produce substantial revenues as a result.

Also Read: New 'Star Wars' Coming in 2015

Lucasfilm's past films, particularly "Star Wars" and "Indiana Jones," fit right into that mold. Disney earns the rights to both franchises, those there are some encumbrances with "Indiana Jones" as Paramount still holds some rights. 

In addition to her role as president, Kennedy will serve as the brand manager for "Star Wars," helping Disney to further capitalize on a brand that has been turned into video games, toys and just about everything else.

"It makes sense not only because of brand compatibility and success together," Iger said on a conference call Tuesday. "Disney understands the importance of iconic characters and what it takes to leverage them effectively to drive growth and create value."

Iger said the deal "fits perfectly with Disney's strategic priorties," adding Lucasfilm intellectual property to Disney's stable of Marvel and Pixar. 

To that end, Disney has announced that a seventh "Star Wars" film will be released in 2015, with more features in the franchise to come. Iger said Disney would release "Star Wars" 7, 8 and 9, and plans to release a new film every two to three years after that.

“For the past 35 years, one of my greatest pleasures has been to see Star Wars passed from one generation to the next,” Lucas said in a statement. “It’s now time for me to pass Star Wars on to a new generation of filmmakers. I’ve always believed that Star Wars could live beyond me, and I thought it was important to set up the transition during my lifetime.  I’m confident that with Lucasfilm under the leadership of Kathleen Kennedy, and having a new home within the Disney organization, Star Wars will certainly live on and flourish for many generations to come. Disney’s reach and experience give Lucasfilm the opportunity to blaze new trails in film, television, interactive media, theme parks, live entertainment, and consumer products.”

Lucas has a history with Disney, daring back to when the "Star Tours" ride opened at Disneyland in 1987. They have since partnered on other theme park attractions and consumer products, prompting Lucas to describe his company as a "mini Disney" in the above video.

Disney acquired Marvel in 2009 for $4 billion and acquired Pixar for $7.4 billion in 2006, making it a corporate hub for some of the most successful global entertainment brands.

Disney CFO Jay Rasulo compared the Lucasfilm acquisition to the Marvel purchase in terms of income potential. Rasulo then noted that Lucafilm generated $550 million in profit in 2005, the last year it released a "Star Wars" film.

Disney believes it will recoup all its money from the "Star Wars" franchise alone with profit from any other division branded "upside."

"We concluded we're uniquely positioned to maximize value of Lucasfilm intellectual property in a manner that can generate substantial value for shareholders above and beyond the share price," Rasulo said.

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