The Walt Disney Co yesterday said that it will buy "Star Wars" and ''Indiana Jones'' movie producer George Lucas's Lucasfilm Ltd and its "Star Wars" franchise for $4.05 billion in a cash and stock deal.

Lucasfilm, fully owned by George Lucas, will become part of The Walt Disney Co's global portfolio of brands that include Disney, ESPN, Pixar, Marvel and ABC.

Under the terms of the deal, Burbank, California-based Walt Disney will pay approximately half of the consideration in cash and issue approximately 40 million or 2.2 per cent of its own shares to George Lucas.

The sale will make George Lucas the second largest shareholder in Walt Disney Co after the trust of Apple Inc co-founder Steve Jobs, who sold his animation studio Pixar in 2006 to Walt Disney Co in a $7 billion cash and stock deal.

In a video posted on YouTube by Walt Disney Co, George Lucas said, ''I'm investing in Disney, that's my retirement fund.''

George Lucas, an icon in the industry, will remain a creative consultant on the new films.

Lucasfilm, headquartered in San Francisco, was founded by George Lucas in 1971. It is a fully-integrated entertainment company. In addition to its motion-picture and television production operations, the company's global activities include Industrial Light & Magic and Skywalker Sound, which serves the digital needs of the entertainment industry for visual-effects and audio post-production.

LucasArts develops and publishes interactive entertainment software worldwide, Lucas Licensing, which manages the global merchandising activities for Lucasfilm's entertainment, Lucasfilm Animation, and Lucas Online, which creates Internet-based content for Lucasfilm's entertainment.

Additionally, Lucasfilm Singapore, produces digital animated content for film and television, as well as visual effects for feature films and multi-platform games.

Walt Disney Co said that the acquisition combines two highly compatible family entertainment brands, and strengthens their long-standing beneficial relationship, which already includes the successful integration of Star Wars content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.

Disney will acquire Lucasfilm, including its popular Star Wars franchise and its operating businesses in live action film production, consumer products, animation, visual effects, and audio post production. Disney will also acquire the substantial portfolio of cutting-edge entertainment technologies that have made movies like ''Star Wars'', which have generated $4.54 billion in worldwide ticket sales and ''Indiana Jones'' movie series that have generated $1.95 billion.

"For the past 35 years, one of my greatest pleasures has been to see Star Wars passed from one generation to the next," said George Lucas, chairman and CEO of Lucasfilm. "It's now time for me to pass Star Wars on to a new generation of filmmakers. I've always believed that Star Wars could live beyond me, and I thought it was important to set up the transition during my lifetime.''

"Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas," said Robert Iger, chairman and CEO of The Walt Disney Co. "This transaction combines a world-class portfolio of content including Star Wars, one of the greatest family entertainment franchises of all time, with Disney's unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value."

Kathleen Kennedy, current co-chairman of Lucasfilm, will become president of Lucasfilm, reporting to Walt Disney Studios chairman Alan Horn. She will also serve as executive producer on new Star Wars Episode 7 that is targeted for release in 2015, with George Lucas serving as creative consultant.

The deal is the third blockbuster acquisition being made by The Walt Disney Co after it acquired Toy Story" creator Pixar in 2006 from Steve Jobs for $7 billion. Ironically, Pixar was founded by Lucas, who sold it for a song to Jobs, who, like Apple, turned the computer animation film studio into a software powerhouse winning 26 Academy Awards, seven Golden Globe Awards, and eleven Grammy Awards.

It also paid $4.2 billion in 2009 for comic book giant Marvel, which counts among its characters such as Spider-Man, the X-Men, the Fantastic Four, Iron Man, the Hulk, Thor, Captain America and Daredevil.

With 2011 revenues of over $40 billion, The Walt Disney Company is a leading diversified international family entertainment and media enterprise operating in media networks, parks and resorts, studio entertainment, interactive media, and consumer products.