LESSON 3

ENTRY MODES
5 Companies Owned By Facebook
• Instagram
Type of Business: Photo and video-sharing app
Acquisition Cost: $1.0 billion
Acquisition Date: April 9, 2012

• Oculus VR
Type of Business: Virtual reality technology company
Acquisition Cost: $2.0 billion
Acquisition Date: March 25, 2014
• Onavo
Type of Business: Mobile web analytics
Acquisition Cost: $100–200 million (estimated)
Acquisition Date: October 2013

• Beluga
Type of Business: Messaging service
Acquisition Cost: Undisclosed
Acquisition Date: March 2, 2011

• WhatsApp
Type of Business: Mobile messenger service
Acquisition Cost: $19.0 billion
Acquisition Date: February 19, 2014
#1: Walt Disney Co. and Pixar
Our first merger example comes from the world of entertainment. In
2007, the Walt Disney Company acquired Pixar Entertainment for a price of
$7.4 billion. This is a merger that makes sense at every level.
Disney has been the biggest name in family entertainment for decades,
creating classics such as Cinderella, Mary Poppins, and The Lion King. Pixar was
a newer entry on the market, but made a huge impact with its beloved
films Toy Story and Finding Nemo.
The synergy between the two companies was apparent even to casual
observers. The merger allowed Disney to consolidate its brand as the biggest
provider of family-friendly films and it allowed Pixar to greatly increase its
production process and release two new films per year. The post-merger Pixar
films, including Up and WALL-E, have been hugely successful.
#2. eBay and PayPal
eBay was the world’s biggest online auction site when it acquired digital
payment provider PayPal in 2002. Its goal was to facilitate online payments
on eBay, making this corporate marriage the perfect vertical merger
example.
The merger led to growth for the merged companies, with stocks rising
dramatically in the aftermath. We do think it’s important to note that eBay
spun off PayPal as a separate company in 2004 on the demands of
investors, but there’s no question that the merger helped eBay solidify its
reputation and its stock has continued to see modest growth while PayPal’s
stock has increased rapidly.