Examine the Disney Pixar merger. Discuss the merger and original contract between Disney/Pixar in the context of Hart’s work on incomplete contracts.
The acquisition that brought Disney and Pixar together started in 1997. It began when the former extended its relationship with the latter by entering into a co-production agreement. Under this agreement, Pixar pledged to produce five original computer-animated feature films for exclusive distribution by Disney. At the time of contracting, the two firms could not describe future contingencies showing they applied Hart’s theory of incomplete contracts. It explains why with time, Pixar became a subsidiary of Disney before the ultimate purchase occurred in January 2006 in an all-stock deal.