Disney CEO Bob Iger said Lucasfilm had already developed an extensive story line on the next trilogy, and Episode 7 was now in early-stage development. He said he talked with Lucas about buying the company from him a year and a half ago, but they didn't decide on a deal until very recently as Lucas set in motion his retirement.
"The last 'Star Wars' movie release was 2005's 'Revenge of the Sith' and we believe there's substantial pent-up demand," Iger said.
The blockbuster deal announced Tuesday will see Disney pay half the acquisition price in cash and half in newly issued stock. The company expects it to add to earnings in 2015. Along with the cash, Lucas will end up owning about 40 million Disney shares, which is about a 2.2 percent stake of the 1.83 billion shares that will be in circulation when the transaction closes.
The deal includes Lucasfilm's prized high-tech production companies, Industrial Light & Magic and Skywalker Sound, as well as rights to the "Indiana Jones" franchise.
The deal brings Lucasfilm under the Disney banner with other brands including Pixar, Marvel, ESPN and ABC, all companies that Disney has acquired over the years.
Lucas was hailed as a cinematic visionary when the original "Star Wars" came out in 1977. But he had become an object of often-vicious ridicule by the time he released 3-D versions of all six films in the Star Wars franchise earlier this year.
Die-hard Star War fans had been vilifying Lucas for years, convinced that he had become a commercial sell-out and had compounded his sins by desecrating the heroic tale that he originally sought to tell.
They railed against him for adding grating characters such as Jar Jar Binks in the second trilogy and attacked him for tinkering with the original trilogy, too. Any revision in special edition or home video releases such as making the Ewoks blink or having a green-skinned alien named Greedo take the first shot at Han Solo in a famous bar scene were treated as blasphemy.
The criticism grated on Lucas, who vowed never to make another Star Wars movie.
"Why would I make any more when everybody yells at you all the time and says what a terrible person you are?" Lucas told The New York Times earlier this year.
"Indiana Jones and the Kingdom of the Crystal Skull," the fourth film in another lucrative franchise, subjected Lucas to even more barbs when it came to the big screen in 2008. Fans of those films were especially outraged about an opening scene that featured Indiana Jones crawling into a lead-lined refrigerator to survive a nuclear bomb blasting.
Lucas was fed up by the time he released "Red Tails," a movie depicting the valor of African-American pilots during World War II, earlier this year. He told the Times he was ready to retire from the business of making blockbusters and return to his roots as a student at USC's film school, where he once made a movie about clouds moving in a desert.
Kathleen Kennedy, the current co-chairman of Lucasfilm, will become the division's president and report to Walt Disney Studios Chairman Alan Horn. She will serve as executive producer for the new movies. Directors for the new movies have not yet been announced.
In the YouTube video, Lucas said the decision to continue with the saga wasn't inconsistent with past statements.
"I always said I wasn't going to do any more and that's true, because I'm not going to do any more, but that doesn't mean I'm unwilling to turn it over to Kathy to do more," Lucas said.
He said he has given Kennedy his story lines and other ideas, "and I have complete confidence that she's going to take them and make great movies."
Kennedy added that she and Lucas had discussed ideas with a couple of writers about the future movies and said Lucas would continue to have a key advisory role. "My Yoda has to be there," she said.
A former weatherman who rose through the ranks of ABC, Iger has orchestrated some of the company's biggest acquisitions, including the $7.4 billion purchase of animated movie studio Pixar in 2006 and the $4.2 billion acquisition of comic book giant Marvel in 2009.
Coincidentally, Lucas owned the startup that later became Pixar, before he sold it to Apple's Steve Jobs in 1986 for about $5 million. When Jobs sold Pixar to Disney, he became Disney's largest single shareholder with a 7.7 percent stake. Those shares are now held in a trust.
Disney shares were not trading with stock markets closed due to the impact of Superstorm Sandy in New York. They closed on Friday at $50.08.