Friday, March 31, 2006

Disney Buys The Gap

For the record, this was an April Fools Joke. Thanks for playing along.

Quality Family Entertainment and Consumer Products Leader Acquires Retail Clothing Trendsetter
BURBANK, Calif. & SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Apr. 1, 2006--The Walt Disney Company

• Paul Pressler Named Chairman over combined Disney, Pixar, and Gap Brands
• Cynthia Harriss Named Chief Store Operations Officer
• Byron Pollitt Named Chief Financial Officer

Furthering its strategy of finding new applications for its creative content, Robert A. Iger, President and Chief Executive Officer of The Walt Disney Company, announced today that Disney has agreed to acquire retail clothing trendsetter The Gap, Inc. in an all-stock transaction, expected to be completed by this fall.

Under terms of the agreement, 0.67 Disney shares will be issued for each Gap share. Based on The Gap's fully diluted shares outstanding, the transaction value is $16.24 billion (a).

This acquisition combines The Gap’s talented executive leadership, preeminent retail resources, location presence, brands, clothing, and accessories expertise with Disney's unparalleled portfolio of world-class family entertainment, characters, theme parks and other franchises, resulting in vast potential for new landmark retail output and brand extension that can fuel future growth across Disney's businesses. With an impressive 3,000-plus stores worldwide, including throughout the United States, as well as in Canada, the United Kingdom, France, and Japan, The Gap's exceptional executive team and 150,000 employees generated USD$16 billion in revenue in 2005.

"With this transaction, we welcome and embrace The Gap’s unique brands, which include the Gap, Banana Republic, Old Navy and Forth & Towne names, including GapKids, babyGap and GapBody, which are some of the most fashionable worldwide. The talented Gap team has delivered outstanding retail sales coupled with compelling brands that have clothed customers of all ages worldwide and redefined the industry by setting a new standard of excellence," Iger said. "The addition of The Gap significantly enhances Disney Consumer Products, which is a critical financial engine for driving growth across our businesses. This investment significantly advances our strategic priorities, which include -- first and foremost -- delivering high-quality, compelling creative content to consumers, the application of new technology and global expansion to drive long-term shareholder value."

Gap President and Chief Executive Officer Paul S. Pressler will serve as Chairman of the new Disney, Pixar, and Gap Worldwide Brands reporting directly to Iger. In addition, Gap brand President Cynthia Harriss will be Chief Store Operations Officer, where she will provide her expertise in retail branding and operations to operating all Disney-owned stores worldwide, including those inside Disney's theme parks, as well as all Gap, Banana Republic, Old Navy, and Forth & Towne stores, reporting directly to Pressler. Gap, Inc. Executive Vice President and Chief Financial Officer Byron H. Pollitt, Jr. will be named Chief Financial Officer of The Walt Disney Company.

"Disney and Gap can now collaborate on strengthening brand names, expanding store operations, and distributing Disney content," said Pressler. "Disney shareholders will regain a presence in the mall and shopping center market."

"At Gap, our brands are about building compelling stories - ones that our customers see themselves in, are passionate about and want to be part of," said Pressler. "That's very much in line with Disney. Also, Gap's executive culture has its roots in Disney. We are excited to bring our additional clothing, accessories, retail, and outlet experience back to a magical company," said Pressler. "Gap brands will have access to Disney characters and content, and, in turn, Gap clothing and accessories can supply the clothing needs for Disney's Resort Guests as well as the costuming needs for Disney Resort Casts and Disney stage, television, and cinema productions."

The acquisition returns to Disney the talented managerial team behind the Disneyland Resort and Disneyland Paris Resort expansions, who will now be involved in the nurturing and expansions of these properties and others. Paul Pressler joined Gap Inc. as President and Chief Executive Officer in September 2002 after 15 years with Disney, including the roles of Chairman of Walt Disney Parks & Resorts, President of The Disney Stores, and Senior Vice President of Disney Licensing. Cynthia Harriss joined Gap Inc. in February 2004 as President of Gap Inc. Outlet after many years with Disney, including roles as President of the Disneyland Resort and Senior Vice President of Stores for The Disney Store. Byron Pollitt assumed his position as Executive Vice President and Chief Financial Officer of Gap Inc. in January of 2003 after 13 years with Disney, including the role of Executive Vice President and Chief Financial Officer for Walt Disney Parks and Resorts.

As Chairman of the new Disney and Gap Worldwide Brands, Pressler will oversee all Disney, Pixar, and Gap-branded products, services, and operations, including Walt Disney Pictures, The Disney Channel, Toon Disney, Radio Disney, Walt Disney Feature Animation, Pixar Animation Studios, Disney Consumer Products, Walt Disney Parks & Resorts, Disney Vacation Club, Walt Disney Imagineering, Disney Cruise Lines, Gap, Banana Republic, Old Navy, and Forth & Towne.

"We are always looking to partner with other entities, and leverage synergistic opportunities to increase shareholder value with strategic executive recruitment," said Iger. "Returning these executives to Disney, acquiring the Gap properties, and aligning Disney and Gap segments accordingly will provide worthwhile integration of both talent and content. With Paul Pressler overseeing the Disney, Pixar, and Gap brands, I will be able to confidently concentrate on growing our other brands, including ABC, ESPN, Touchstone, Miramax, Hollywood, Hyperion, and the Muppets."

Doris and Don Fisher opened the first Gap store in San Francisco in 1969 as a place to buy blue jeans. Today, the company has expanded into several brands. Gap is about fresh, casual American style. Banana Republic is an affordable luxury brand. Old Navy brings fun, fashion and value to the whole family. Forth & Towne is a destination offering a new shopping experience for women. On March 2, 2006, the company reported net sales of $865 million for February. On Feb. 23, 2006, Gap reported that fiscal 2005 earnings per share were $1.24. Net sales for the fourth quarter were $4.8 billion, net sales for the fiscal year 2005 were $16 billion.
The Boards of Directors of Disney and Gap have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antritrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions. The agreement will require the approval of Gap's shareholders.

The Disney Board was advised by Goldman, Sachs & Co. and Bear, Stearns & Co. The Gap Board was advised by Credit Suisse.

(a) Based on Disney's closing share price of $27.89 as of 3/31/06.

About The Walt Disney Company:
The Walt Disney Company together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products. Disney is a Dow 30 company, had annual revenues of nearly $32 billion in its most recent fiscal year, and a market capitalization of approximately $53.7 billion as of March 31, 2006.

Investor Conference Call:
An investor conference call will take place at approximately 2:15 p.m. PT / 5:15 p.m. ET Monday, April 3, 2006. To listen to the Webcast, turn your browser to or

If you cannot participate in the live Webcast, re-plays will be available for domestic callers at (888) 286-8010 (PIN 56666399) and for international callers at (617) 801-6888 (PIN 56666399), or at until 4:00 p.m. PT on Tuesday, April 18, 2006. An .mp3 version of this Webcast replay will also be available approximately 24 hours after the Webcast concludes at

Posted: April 1, 2006

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