DISNEY BOUGHT PIXAR BUT PIXAR HAD ONCE BELONGED TO STEVE JOBS
Disney eventually paid $7.4 billion for Pixar. But before Pixar became one of the biggest names in animation, it was a small computer graphics division that Steve Jobs bought from George Lucas.
The strange part?
When Disney finally bought Pixar, Steve Jobs didn't simply walk away with cash. He became one of Disney's biggest shareholders.
This is the unusual story behind one of the most important acquisitions in entertainment.
PIXAR DIDN'T START AS PIXAR
The story begins inside Lucasfilm, George Lucas's company.
In the early 1980s, Lucasfilm had a computer graphics division working on advanced computer animation and graphics technology.
The team included people who would later become extremely important to Pixar.
One of them was Ed Catmull.
Another was John Lasseter, who joined the computer division in 1984.
The group was working on technology that was far ahead of what most animation studios were using at the time.
But it wasn't yet the Pixar everyone knows.
THEN STEVE JOBS BOUGHT IT
In 1986, Steve Jobs purchased Lucasfilm's Computer Division from George Lucas.
He turned the group into an independent company.
And he called it:
Pixar.
At the time, only around 40 people worked there.
It wasn't a giant movie studio.
It wasn't producing billion-dollar franchises.
It was essentially a small technology company built around computer graphics.
AND DISNEY WAS ALREADY THERE
Here's the part that makes the story even stranger.
The relationship between Pixar and Disney didn't begin with the 2006 acquisition.
It started much earlier.
In 1986, Pixar and Disney began working together on CAPS — the Computer Animation Production System.
Disney used the technology to help produce traditional animated films.
In fact, Pixar says the first check it received from a client after becoming an independent company came from Disney for work on CAPS.
So the company that eventually bought Pixar was already one of its earliest business partners.
PIXAR HAD A PROBLEM
Technology alone wasn't enough.
Pixar had developed impressive computer graphics technology, but turning that technology into a huge standalone business was difficult.
The company experimented with hardware, software and animation.
Then something changed.
Pixar's animation became the real opportunity.
And one short film helped demonstrate what the technology could do.
THEN CAME TOY STORY
In 1995, Pixar and Disney released Toy Story.
It was the first feature-length computer-animated film.
Suddenly, Pixar wasn't simply a technology company anymore.
It had become a movie studio.
And more importantly, it had created a completely new way to make animated feature films.
The relationship between Pixar and Disney became much more valuable.
STEVE JOBS WAS NO LONGER JUST THE OWNER
By the 1990s and early 2000s, Pixar had become a major company.
Steve Jobs served as its chairman and CEO and remained its largest shareholder.
By early 2006, Jobs owned approximately 50% of Pixar's outstanding shares.
That meant something unusual was about to happen.
Disney wasn't simply negotiating with a studio.
It was negotiating with the person who controlled roughly half of that studio.
THEN DISNEY OFFERED $7.4 BILLION
On January 24, 2006, Disney announced that it had agreed to acquire Pixar.
The deal was structured entirely in Disney stock.
The announced transaction value was approximately:
$7.4 BILLION
After accounting for Pixar's cash, Disney described the net value as approximately $6.3 billion.
The deal would turn Pixar into a wholly owned Disney subsidiary.
But Steve Jobs wasn't disappearing.
He was about to become part of Disney.
JOBS GOT DISNEY STOCK
Under the merger agreement, each Pixar share was converted into 2.3 Disney shares.
Jobs held 60,000,002 Pixar shares.
Those shares became 138,000,004 Disney shares.
After the transaction, Jobs owned approximately 6.3% of Disney.
That made him Disney's largest individual shareholder at the time.
And Disney appointed him to its board.
So the man who had once purchased Pixar from George Lucas ended up owning a significant piece of the company that purchased Pixar.
DISNEY DIDN'T JUST BUY MOVIES
Disney wasn't buying Pixar simply because it wanted a collection of successful films.
The transaction combined two different strengths.
Pixar had:
Disney had:
Disney's own announcement described the deal as combining Pixar's creative and technological resources with Disney's entertainment portfolio.
It was essentially a combination of technology + creativity + distribution + intellectual property.
BUT DISNEY DIDN'T ERASE PIXAR
This is one of the most interesting parts of the deal.
Disney and Pixar planned to keep Pixar's production facilities and preserve its creative culture.
Ed Catmull became president of the combined Pixar and Disney animation studios.
John Lasseter became chief creative officer across Pixar and Disney animation, as well as Disney Imagineering.
So Disney wasn't simply buying Pixar and replacing it.
It was trying to keep the thing that made Pixar valuable.
THE OWNERSHIP JOURNEY IS CRAZY
Think about the chain:
George Lucas
↓
Lucasfilm Computer Division
↓
Steve Jobs buys it
↓
Pixar becomes independent
↓
Pixar creates successful animated films
↓
Disney buys Pixar for $7.4 billion
↓
Steve Jobs receives Disney shares
↓
Steve Jobs becomes a major Disney shareholder
It's almost like the asset changed owners several times while the person who transformed it stayed connected to the story.
AND THAT CHANGED DISNEY TOO
When the acquisition closed on May 5, 2006, Pixar became a wholly owned subsidiary of Disney.
Jobs joined Disney's board.
Catmull and Lasseter took major leadership roles.
The two animation operations were brought together while Pixar's creative identity was deliberately preserved.
The deal therefore wasn't just:
Disney buys Pixar.
It was:
Disney buys Pixar's technology, people, creative system and intellectual property — while giving Pixar's leadership a major role in shaping Disney's animation future.
THE REALLY INTERESTING BUSINESS LESSON
The most valuable thing Steve Jobs bought in 1986 wasn't a famous animation franchise.
Pixar didn't have one yet.
He bought a team, technology and possibility.
Twenty years later, Disney paid billions for what that combination had become.
That's an important distinction in business.
Sometimes you're not buying what a company is today.
You're buying what its people, technology, intellectual property and business model could become together.
MAACAT PERSPECTIVE
Pixar's story is unusual because the ownership changed, but the underlying value kept evolving.
George Lucas owned the computer division.
Steve Jobs turned it into an independent company.
Pixar turned computer animation into a major movie business.
Then Disney bought Pixar and gave its leadership a major role inside Disney.
The lesson isn't simply that Disney bought a successful animation studio.
It's that an asset can become dramatically more valuable when the right owner gives it a different business model, distribution system and opportunity to grow.
Sometimes the most valuable company isn't the one with the biggest product.
It's the one that figures out what the product could become.
