Jan. 19 (Bloomberg) -- Shares of Pixar, creator of ``Toy Story'' and ``Finding Nemo,'' rose to a record on optimism the company may be bought by Walt Disney Co. Disney stock had its biggest increase in almost two years.

The companies are in talks for Disney to buy some or all of Pixar, according to a person who has been briefed on the negotiations. Pixar shares increased $1.61, or 2.8 percent, to $58.87 at 4 p.m. in Nasdaq Stock Market composite trading.

An agreement would bolster Disney's film unit and cement an existing relationship that generated Academy Awards and more than $3.2 billion in worldwide box-office receipts. Emeryville, California-based Pixar would augment Disney's slate of computer- animated films including ``Chicken Little.'' Pixar Chief Executive Officer Steve Jobs may also become Disney's largest shareholder.

``This is a situation that both sides would be satisfied with,'' said Peter Jankovskis, director of research at Lisle, Illinois-based Oakbrook Investments LLC, which has $1 billion under management, including more than 700,000 Disney shares.

The negotiations call for a price just above Pixar's $6.7 billion market value, the Wall Street Journal said, citing people familiar with the talks.

Disney spokeswoman Michelle Bergman didn't return calls seeking comment. Pixar spokesman Nils Erdmann declined to comment.

Pixar shares rose as high as $60 earlier today. The stock has gained 8.6 percent this year after trading at a 12-month low of $41.25 on Aug. 4. Disney rose $1.04 to $26.24 on the New York Stock Exchange, the stock's biggest jump since March 12, 2004.

Jobs's Draw

The deal would mark a coup for Disney CEO Robert Iger, who took over in October and began trying to rehabilitate the company's relationship with Pixar after former CEO Michael Eisner and Jobs had clashed publicly. The companies had been talking about a smaller deal, where Disney would extend an agreement to distribute Pixar's films.

Disney and Pixar may settle on a smaller arrangement covering distribution. The Los Angeles Times and the New York Post also reported the companies were in talks earlier this month.

Another draw would be Jobs himself, who would become the largest individual Disney shareholder and probably would join the board of Burbank, California-based Disney, the Wall Street Journal said.

``He would be a very different person to have on Disney's board,'' said Theresa Wise, a media analyst at Accenture Ltd. in London. ``He's not a studio guy, a deal-doer. He's someone from a creative background.''

Building Bridges

Pixar was formed in 1986 when Jobs bought the computer- graphics division of Lucasfilm Ltd. for $10 million and co- founded the company with former Lucasfilm Vice President Ed Catmull, now Pixar's president. The company began to produce short animated films and television commercials.

In 1991, Pixar and Disney formed a partnership to develop, produce and distribute as many as three feature films. Pixar went public four years later, selling shares for the equivalent of $11 each and raising $140 million. ``Toy Story'' was then released, the first fully computer-generated feature film.

Disney and Pixar have produced six films together, including ``Finding Nemo,'' the second-highest grossing animated movie, ``Toy Story,'' ``Toy Story 2,'' ``A Bug's Life,'' ``Monsters, Inc.'' and ``The Incredibles.''

``Iger is seen as someone much more able to build bridges and mend relationships with important partners,'' Wise said. Under Eisner, Disney ``was almost ready to kill the golden goose, almost ready to part ways with Pixar because the relationship was so strained.''

Eisner Spat

Jobs had called Disney's film sequels ``pretty embarrassing,'' and Eisner said computer animation of human figures was ``pathetic.''

Jobs ended talks to extend the Disney distribution deal in January 2004, and said he would seek another partner. Disney said at the time that it didn't accept Pixar's final offer because it would cost too much.

Jobs, 50, in November said Pixar would have a deal in place with Disney by the end of 2005 and that a delay may indicate he was negotiating with another partner. Every major Hollywood studio has expressed interest in distributing Pixar films, he said.

Under the previous Disney agreement, the two companies shared costs and revenue equally after Pixar paid a distribution fee.

To contact the reporter on this story: Alex Armitage in Los Angeles at aarmitage@bloomberg.net.

Last Updated: January 19, 2006 17:09 EST