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02/11/2004: Breaking News Breaking News

Comcast offers $66 billion for Disney
from Reuters @ CNet

Comcast on Wednesday launched an unsolicited proposal to buy Walt Disney for more than $54 billion in stock to join the largest U.S. cable operator with one of the most storied U.S. media companies, known for its film studio and theme parks.

If successful, the deal would vault Comcast into one of the world's largest media companies combining Disney's film studio, ABC television network, ESPN sports network and theme parks with Comcast's 21 million cable subscribers.

It would pit Comcast against Time Warner, owner of the America Online, and News Corp. as media conglomerates that combine large programming assets with distribution outlets like cable and satellite.

Comcast proposed exchanging 0.78 of a Comcast class A share for each Disney share, which values Disney at $26.47 a share and represents a 10 percent premium over Disney's share price, based on Tuesday's closing share prices.

Comcast valued the deal at $66 billion, including the assumption of $11.9 billion in debt.

Shares of Disney rose to $27.90 in premarket trade, from a close of $24.08 on Tuesday. Shares of Comcast fell to $32.15 from a closing price of $33.93 on Tuesday.

Comcast said it was making its unsolicited proposal public after Disney Chief Executive Michael Eisner declined to enter discussions.

The offer comes as dissident former directors Roy Disney, the nephew of company founder Walt Disney, and Stanley Gold are trying to oust Eisner, whom they accuse of mismanaging Disney over the past decade. Roy Disney has been lobbying institutional shareholders to vote against the re-election of Eisner and three other directors at the upcoming shareholders meeting early next month.

Disney has started to fight back with a public campaign of its own, citing the film studio's No. 1 box office performance last year and its expectation for growth in earnings per share at least 30 percent this fiscal year.

A Disney meeting for institutional investors and analysts is set to begin on Wednesday in Orlando, Fla.

"The Disney board is under tremendous pressure from former dissident members Roy Disney and his supporters, which would indicate that the board may be receptive to this buyout offer," said Timothy Ghriskey, portfolio manager with Ghriskey Capital Partners.

"One would have to think that the Comcast bid would have to be raised significantly to get this deal done, given the lack of much premium in the current bid and a still somewhat depressed Disney stock price," he said.

Comcast used a similar "bear hug" campaign in July 2001, when it launched an unsolicited proposal to buy AT&T's cable assets, then known as AT&T Broadband. Over a year later, it successfully closed that deal for $72 billion.


Wednesday the 11th of February, prof noted:


the track record for mulitmedia conglomerates is so good, why didnt they so this earlier?


Wednesday the 11th of February, awiggins noted:


Is this thing having trouble with that damn sarcasm tag again?


Wednesday the 11th of February, santo26 noted:


(Y)our broadband internet service, brought to you by discast- or will it be comney? hope disney wants to be inderectly associated with the athenaeum...


Wednesday the 11th of February, Ghost of Santo26 past noted:


"Welcome to Disnysoft, a division of third Reich International."


Wednesday the 11th of February, rafuzo noted:


Good, maybe they'll axe Eisner now.


Wednesday the 11th of February, sLoTh noted:


Me like the big mouse.