Walt Disney Productions, which pulled out of a controversial plan to acquire Gibson Greetings Inc. last August, on Monday announced that it has granted the Cincinnati firm exclusive rights to use Disney characters on greeting cards, gift wrap and related products for the next three years.
Terms of the deal were not disclosed, but the licensing agreement was apparently needed to end Gibson’s veiled threat of legal action. Meanwhile, Disney has ended a 14-year association with the card division of Hallmark Cards Inc., the nation’s largest card manufacturer.
Gibson spurned Disney’s offer last year to pay $7.5 million and certain expenses related to the aborted merger, but on Monday the greeting-card company said it will accept those terms, in keeping with a provision in the two companies’ initial agreement. Disney said the payment has already been accounted for in the Burbank-based company’s 1984 earnings statements.
Gibson, the nation’s third-largest greeting-card company, agreed last June to be acquired for new shares of Disney stock worth nearly $330 million. A number of Disney shareholders attacked the plan as a waste of corporate assets, however. Disney and Gibson renegotiated the price last July, reducing it by as much as $40 million.
On Aug. 17, under mounting pressure of a proxy fight threatened by dissident shareholder Irwin L. Jacobs, the Disney board voted to scrap the merger, just five days before the deal was scheduled to close. The next day, Gibson President Thomas M. Cooney accused Disney of acceding to Jacobs’ demands and said his company would take steps “to ensure that the interests of Gibson shareholders are protected fully.”
Ben Chester, Disney’s communications director, declined to say whether Gibson will pay Disney a higher licensing fee than previously paid by Hallmark for the licensing rights in greeting cards. Gibson’s gift wrap division already had licensing rights to Disney characters, and that arrangement will continue, Chester said.
The Disney official said that Hallmark’s licensing agreement expired at the end of 1984, and the card company halted its operation of stores at Disney’s two theme parks early in January. Gibson will begin sales operations at the California and Florida theme parks in June, Chester said.
Asked to comment on the loss of the Disney license, Hallmark’s director of marketing communications, Nancy Matheny, said: “We simply don’t have the . . . license anymore. . . . I really can’t comment any further than that.”
Analysts viewed the new licensing arrangement as a deal “sweetener” to settle the differences between Gibson and Disney, but two commented that Disney might be gaining a more aggressive marketing partner in the process. In a recent four-year period, Gibson nearly doubled its sales and more than quintupled its profits.
Elliott L. Schlang, an analyst with the brokerage firm of Prescott, Ball & Turben in Cleveland, called the deal a “plus” for Gibson but added that he considers it “a coup for Disney as well because of the momentum that Gibson has built up here.”
Lee Isgur, an analyst with Paine Webber Mitchell Hutchins Inc. in New York, said that, without knowing the terms, he could only say: “Disney changed horses, but you may have a more efficient racehorse. You really don’t know . . . the true story.”