In 1986, Jobs bought The Graphics Group (later renamed Pixar) from Lucasfilm's computer graphics division for the price of $10 million, $5 million of which was given to the company as capital.
The new company, which was originally based at Lucasfilm's Kerner Studios in San Rafael, California, but has since relocated to Emeryville, was initially intended to be a high-end graphics hardware developer. After years of unprofitability selling the Pixar Image Computer, it contracted with Disney to produce a number of computer-animated feature films that Disney would co-finance and distribute.
The first film produced by the partnership, Toy Story, with Jobs credited as executive producer,
brought fame and critical acclaim to the studio when it was released in
1995. Over the next 15 years, under Pixar's creative chief John Lasseter, the company produced box-office hits A Bug's Life (1998); Toy Story 2 (1999); Monsters, Inc. (2001); Finding Nemo (2003); The Incredibles (2004); Cars (2006); Ratatouille (2007); WALL-E (2008); Up (2009); and Toy Story 3 (2010). Finding Nemo, The Incredibles, Ratatouille, WALL-E, Up and Toy Story 3 each received the Academy Award for Best Animated Feature, an award introduced in 2001.
In the years 2003 and 2004, as Pixar's contract with Disney was running out, Jobs and Disney chief executive Michael Eisner tried but failed to negotiate a new partnership,
and in early 2004, Jobs announced that Pixar would seek a new partner
to distribute its films after its contract with Disney expired.
In October 2005, Bob Iger
replaced Eisner at Disney, and Iger quickly worked to patch up
relations with Jobs and Pixar. On January 24, 2006, Jobs and Iger
announced that Disney had agreed to purchase Pixar in an all-stock
transaction worth $7.4 billion. When the deal closed, Jobs became The Walt Disney Company's largest single shareholder with approximately seven percent of the company's stock. Jobs's holdings in Disney far exceeded those of Eisner, who holds 1.7 percent, and of Disney family member Roy E. Disney,
who until his 2009 death held about one percent of the company's stock
and whose criticisms of Eisner — especially that he soured Disney's
relationship with Pixar — accelerated Eisner's ousting. Jobs joined the
company's board of directors upon completion of the merger and also
helped oversee Disney and Pixar's combined animation businesses from a
seat on a special six-person steering committee.