Walt Disney made its first acquisition in social networking on Wednesday, buying Club Penguin, which operates an online virtual world for children, for a fee that could eventually rise to $700m.

The deal, Disney’s first since its $7.4bn purchase of Pixar last year, bolsters its presence in digital entertainment. It will also guarantee a generous pay-out for Club Penguin’s founder shareholders – Lane Merrifield, Dave Krysko and Lance Priebe – who will each initially receive more than $115m for their stakes in the business.