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Chapter 176: Initiating the Acquisition
🕑 Added 2025-01-01 10:00:45 +0000 UTCSince Marvel went public in 1991, under the operations of Wall Street tycoon Perelman, combined with a surge of capital-driven enthusiasm in the North American comic industry, its market valuation expanded rapidly.
Marvel's business grew aggressively, extending beyond traditional comics into card games, stickers, and snack businesses.
At this time, Marvel's controller, Perelman, had little understanding of comics. However, he recognized the potential to make huge profits by developing ancillary industries around Marvel's intellectual properties (IPs).
The release of X-Men set a record with 8 million copies sold, certified by the Guinness World Records. This solidified Perelman's belief in Marvel's value.
It was during this period, after acquiring a toy company, that Avi Arad joined Marvel's comics division. Arad proposed creating Marvel's own movie studio to produce films.
However, Perelman rejected the suggestion, preferring to sell adaptation rights rather than create films himself.
As a result, many influential superheroes' rights were sold to major Hollywood studios. Sony/Columbia acquired Spider-Man.
James Cameron had considered making a Spider-Man movie, but the project fell through, and he went on to direct True Lies.
20th Century Fox obtained the rights to X-Men, providing Marvel with a significant licensing fee.
Naturally, as the original copyright holder, Marvel would later receive revenue shares from box office earnings and other sources when these movies were eventually produced. Furthermore, successful films would drive sales of related comics, toys, and other merchandise.
However, due to technical limitations, superhero movies were difficult to realize. Despite a long wait, these movie studios showed no signs of initiating their superhero projects.
Meanwhile, over at DC Comics, Batman and Superman films continued without interruption.
By 1994, Marvel, after its frenzied expansion in the early '90s, saw its stock price soar from $5 per share to $35 per share.
That year, Marvel's annual revenue reached $514 million, with a net profit of $60 million, cementing its position as the undisputed leader in the North American comic industry.
But good times didn't last long. In the early '90s, the comic boom not only boosted stock prices for comic companies but also turned their products into collectible items.
For instance, an issue of The Avengers released in 1992, priced at $2.50, shot up to $40 within a year.
Many similar "collector's myths" emerged, leading even non-comic fans to join the frenzy, hoping to cash in.
Instead of practicing scarcity tactics, comic companies were eager to monetize, dramatically increasing their print runs.
By 1994, however, the comic collection bubble had burst entirely.
Adding insult to injury, revenue from stickers and cards—key contributors to Marvel's earnings—also plummeted due to similar reasons.
By 1995, Marvel had suffered a loss of $48 million. In 1996, things worsened, with a $200 million loss in just the first two quarters.
As a publicly traded company, Marvel's stock price tumbled from its peak of $40 per share to under $10 per share.
This drastic drop in stock price caused Marvel's valuation to shrink significantly, forcing Perelman to consider selling the company.
But at this point, the comic industry had become a hot potato no one wanted to touch.
Aside from DC Comics, already owned by Warner Bros., other comic companies were also struggling—either going bankrupt or undergoing restructuring.
Marvel itself was on the brink of collapse, preparing to file for bankruptcy and awaiting salvation.
At 417 Fifth Avenue in New York, Marvel's headquarters hosted a shareholders' meeting. Unlike previous lively gatherings, this one was filled with gloom.
"Given the company's current challenges, I propose we scale back operations and cut all unprofitable divisions, focusing solely on core businesses," one shareholder suggested.
But another immediately opposed, "At this point, no division is profitable—not even comic publishing. Are you suggesting we cut that too?
Then what's left of us as a comic company?"
"Marvel has long since evolved beyond being just a comic company. The reality is that entertainment has transformed dramatically.
People no longer enjoy comics—they watch TV, go to the movies, and play the latest video games. Comics are no longer appealing.
Marvel needs to adapt and change; transformation is our only path forward."
The shareholders argued vehemently, ending the meeting in disarray. Everyone seemed more eager to jump ship than to save Marvel.
Had the shareholders united, Marvel might have had a chance to turn things around. After all, it still held many beloved superhero IPs.
But as the saying goes, external factors might trigger a company's downfall, but internal discord seals its fate.
At this shareholders' meeting, Perelman himself didn't even show up, instead hiding in his Wall Street office to avoid confrontation with shareholders and creditors.
The conflicts between Perelman and the shareholders, as well as among the shareholders themselves, had been masked by earlier successes. Once those faded, all disputes erupted.
After the meeting, Stan Lee, a key figure in Marvel during the '60s and '70s, approached a familiar shareholder.
"What was the outcome?" he asked.
The shareholder shook his head, "Sorry, Stan. There's nothing I can do."
With that, he walked away, leaving Stan Lee standing there, looking devastated. Could the comic company he had poured his heart into really collapse?
But as another saying goes, when one door closes, another opens.
In Perelman's Wall Street office, a new visitor arrived—Gilbert's investment manager, David.
"To be frank, Perelman, we both know Marvel's current situation—it's teetering on the brink of bankruptcy," David said.
Perelman, aware that David represented Hollywood's renowned director Gilbert, was no stranger to Gilbert's wealth.
Last year, Facebook and Banana both went public. Facebook's valuation skyrocketed to $5 billion, while Banana, with its portal site and search engine business, reached nearly $10 billion.
Gilbert also held significant assets. According to The Wall Street Journal, he was a stakeholder in Netscape (now Amazon), alongside substantial shares in Cisco, Oracle, and Microsoft.
Except for his involvement with the still-struggling Apple, Gilbert was considered an investment genius, with an estimated net worth exceeding $6 billion.
Moreover, Gilbert's finances were clean, with no bad debts—an exceptionally attractive profile.
Knowing this, Perelman realized Marvel still had value.
"Let's get to the point, David. What does Mr. Landrini want?" Perelman asked, prepared to drive a hard bargain.
David replied, "My boss knows you own 30% of Marvel's shares. He's willing to offer $100 million for your stake."
"$100 million?" Perelman laughed before turning serious. "David, you must be joking. $100 million for my shares? At least this amount."
He raised five fingers. "Five hundred million, plus shares in Banana."
"That's impossible," David rejected outright. "We both know Marvel can't last much longer before filing for bankruptcy protection.
Now is the best time to sell while there's still interest, Mr. Perelman."
But Perelman, as cunning as a wolf, remained unmoved. "Then we'll see. I can always sell my shares to someone else."
"If that's your attitude, then there's no need for further discussion," David said, standing to leave.
Before walking out, he added, "Think it over, Mr. Perelman. Marvel is worthless in your hands. Only under my boss's guidance can it reach its full potential."
Perelman feigned indifference but was inwardly uneasy.
Not only was Marvel in trouble, but his other Wall Street ventures were also struggling, and his wealth was dwindling rapidly. Selling Marvel to Gilbert presented a potential lifeline.
Summoning his team, Perelman began strategizing how to sell Marvel at a high price and squeeze as much money as possible from Gilbert.
Meanwhile, David reported the outcome of the meeting to Gilbert in Los Angeles.
Gilbert wasn't entirely sure when Marvel filed for bankruptcy, but he predicted it would happen by the end of this year or early next year.
Rumors suggested Perelman didn't actually want Marvel to go bankrupt but was using the threat to scare off shareholders. However, a court, finding Marvel eligible, approved the bankruptcy.
Regardless of the rumor's validity, Perelman's conflicts with shareholders were real.
Since Perelman wanted to haggle, Gilbert decided to let him wait. He instructed David, "There are plenty of small shareholders looking to sell. Focus on acquiring their shares first."
"Understood. But I think we should take a gradual approach. Buying too much at once could inflate perceived value, prompting higher prices," David advised.
"Do as you see fit," Gilbert agreed. "But I want at least 40% of Marvel's shares."
David assured him he'd get the job done.
Given Marvel's condition, Gilbert could have pursued an aggressive takeover but chose not to be a scapegoat. With few competitors interested in Marvel, Gilbert had time on his side.
Marvel's losses would continue, and those demanding exorbitant prices would eventually cave.
