Pixar Perfect at Disney

Bob Iger left no doubt Tuesday that change is the order of the day at Disney (DIS Quote).

With Tuesday's $7.4 billion deal for Pixar (PIXR Quote), Iger not only makes a big bet on Steve Jobs and his red-hot animated movie studio. He also breaks decisively with the lamented Michael Eisner era.

The companies confirmed after weeks of speculation that they'll merge in a massive stock swap. Disney will issue 2.3 shares for each Pixar share in a deal worth a net $6.3 billion, excluding Pixar's cash on hand. Jobs will join Disney's board and Pixar President Ed Catmull will serve as president of the new Pixar and Disney animation studios. Disney also said it will boost its buyback plan to 400 million shares from the previous 225 million.

Shares in both companies were halted ahead of the announcement of the deal.

"With this transaction, we welcome and embrace Pixar's unique culture, which for two decades, has fostered some of the most innovative and successful films in history," Iger said. "The addition of Pixar significantly enhances Disney animation, which is a critical creative 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."

Lurking somewhere behind a CNBC set, Eisner must be cursing blue bloody murder. He can only sit and watch as Iger, the man he groomed to take over as CEO at the Mouse House, has not only smoothed out a relationship with Eisner's archrival, Apple (AAPL Quote) founder Jobs. Iger has also engineered a deal that has the effect of making Jobs Disney's biggest shareholder.

Hollywood and Silicon Valley machinations aside, the Disney board has made a huge decision.

Disney's animation studio has struggled in recent years. Meanwhile Pixar has been the gold standard in computer-generated animation, yielding some $3.2 billion in box office from its popular efforts. While Disney, as its distribution partner, was richly rewarded in the arrangement, it was a sore spot at the company that the storied studio of Walt Disney himself was losing ground to upstarts Pixar and DreamWorks (DWA Quote).