EARN OUTS: WALT DISNEY’S ACQUISITION OF CLUB PENGUIN
In August 2007 Walt Disney, the entertainment company, announced the acquisition of Club Penguin, a children’s social networking/virtual world business. The initial payment for the purchase is approximately $350 million, with the potential for an additional payment of up to $350 million depending on the growth of Club Penguin’s earnings in the next couple of years. The three founder shareholders of Club Penguin, who receive shares for their stake in the business, remain as the senior management team of the business, reporting to the executive vice-president of Disney’s internet group. The business model is expected to remain broadly unchanged.