Disney to Buy Marvel for $4 Billion

Updated for stock-price movements and to include further detail about the deal's terms

BURBANK, Calif. (TheStreet) -- Disney(DIS Quote) said Monday it will buy Marvel Entertainment(MVL Quote), the comic-book company, for a combination of cash and stock.

Based on Friday's closing stock prices, the deal values Marvel at about $50 a share, or about $4 billion.

Marvel shareholders will receive $30 cash plus 0.745 Disney shares for each Marvel share they own.

But if the stock prices of either company fluctuate enough, the mix of cash and equity will be adjusted so that, at the deal's closing, Disney stock will not be less than 40% of the total price. Which means that Disney will need to pony up about $2.4 billion in cash for Marvel.

The news drove shares of Marvel higher by 25% Monday. The stock was changing hands late in the session at $48.44, up $9.79 from its previous close, on volume of 12 million shares, more than 14 times the daily average.

Disney shares, meanwhile, slipped 74 cents, or 2.8%, to $26.10.

Marvel is known for its popular superhero serials, which have translated profitably onto the big screen over the years -- though its financial results have shrunk since the recession began, along with all other media companies. The company's iconic characters include Spider Man, the X-Men, the Fantastic Four and Captain America.

Marvel CEO Ike Perlmutter, whose 206,335 Marvel shares (as of April) are worth more than $10 million under the deal's terms, will stay on at Disney to oversee the Marvel property.

The acquisition had its share of critics, at least on the Disney side of the deal. Some analysts viewed the $4 billion price tag as dear. Others noted that Disney will have to wait until 2012 to see Marvel add to its earnings -- and, in fact, the purchase will subtract from Disney's bottom line after it issues some 59 million new shares for the deal.

Standard & Poor's, meanwhile, placed its Disney debt ratings on watch "with negative implications."

The agency cited Disney's increased leverage over the last year, the result of weakening earnings before interest, taxes, depreciation and amortization during the recession. "In our view, Disney may need to issue debt to supplement its cash for this transaction," the agency said in a research report issued Monday afternoon.

-- Written by Scott Eden in New York