Slashdot Mirror
Disney Board Turns Down Comcast Takeover Bid
scifience writes "Disney's board of directors today turned down Comcast's hostile takeover bid, reports MSNBC. The board expressed confidence in Eisner's leadership. One interesting quote released by the board is that they will, '...carefully consider any legitimate proposal...' Does this mean that they did not believe Comcast's offer to be legitimate?"
That phrase is probably a hedge against lawsuits. If the board did not give the appearance of considering offers, then that would leave them open to lawsuits by shareholders for breach of duties.
According to economist article the Comcast offer was viewed as clearly low-ball. They would need to raise it by $8 per share to be on par with Disney perceived share value. What Disney may be doing is engaging in shrewd negotiations- the proper thing to do! I quote the salient paragraph from Economist article:
"Mr Eisner, one of the entertainment world's great survivors, will no doubt try to fight to the death. He may offer yet more corporate governance reforms--though the easy ones are mostly done. He will point out that Comcast's opening offer, originally worth $27 a share and falling, is too low--though Comcast has surely known all along that it will have to raise its offer closer to the $35 that Lawrence Haverty of State Street Research says would tempt institutional investors. The fact is, if Disney's board really wants to keep one of the world's iconic companies independent, its best strategy may be to replace Mr Eisner forthwith. Otherwise, Comcast will soon be doing it instead."
Evil Selling Evil to Evil.
"Jeremy, you need to get to an internet cafe and cut and paste some appropriate sentiments about me from the world wide
No, a hostile takeover is the process of buying up enough shares so that the group attempting the takeover starts to own enough of the company to make the current board meaningless. As the takeover group crosses ownership thresholds, they start to have enough shares to name their own people to the board of directors.
If the takeover works, then the takeover interests will own a majority of the voting shares, and therefore will be able to appoint a majority of the board. At that point, the new members of board of directors will overrule and old members left standing, and the new board approves the takeover.
umm.. no. It means they didn't accept it. They still considered it. AFTER considering it, they decided not to accept it.
Consider v. - To Think Carefully About
Oh, there hasn't been one yet... to propose a merger to a board you haven't yet struggled to take over is a friendly takeover, the fact it was laughed at not withstanding... Or, to say it another way... Slashdot invoked a business buzzword where it didn't belong in the summary yet again...
Or, to say it another way... Slashdot invoked a business buzzword where it didn't belong in the summary yet again...
Exactly. The word "hostile" doesn't even appear in the linked article.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
I've been hearing, for years, from people in the disney organisation about Eisner's childish tactics and thirst for power. The board is comprised of his yes men, they will do what he says. Roy Disney as much as said this in his letter of resignation http://savedisney.com/letters/ The other items in the letters section of Roy Disney's website http://savedisney.com will reenforce this.
Many of the problems now being publically brought up by Roy Disney and Stanley Gold are ones that I and people familiar with the internal workings of the Disney creative machine have been voicing for years. Eisner's got to go, for the good of the company.
I don't want to see Disney swallowed up by a large corporation. There's still time to turn it around and save it, but I do not beleive this will happen. I, personally, beleive that Disney will eventually be bought. I didn't expect it to happen, or even be contemplated, this soon, but I believe it is inevitable unless Eisner is outted and the company drastically changes course.
Disney does not have a poison pill. Once the story broke, a lot of articles remarked about how Disney was an easy target for a takeover for that very reason.
Kings Island, Kings Dominion, etc. have had Hanna Barbera areas since their inception. I suspect Kings Island will change, as has Kings Dominion. For example, most of the HB themed rides at KD are now Nickelodeon rides. Yogi's Cave is gone. No Smurf train.
Okay, a couple of links to 'Kings' parks' history.
The parks were owned by Taft Broadcasting. Went into agreement with HB. bought by Paramount, who has been putting in new, more familiar, better money-making, and wholly owned brands.
Jesus was all right but his disciples were thick and ordinary. -John Lennon
This is not the first time this has happened to Disney.
Back around 1980, Disney was having trouble. They hadn't had a hit movie in years, and the newly opened EPCOT Center wasn't the big tourist draw that had been anticipated. The sharks on Wall Street were beginning to circle. A speculative investor named Saul Steinberg attempted a leveraged buy-out of Disney. Disney tried many strategies to fend him off, and ultimately ended up paying him to go away by buying back his shares at a premium price (known on Wall Street as, "greenmail").
Realizing that there was nothing preventing this from happening again, the board took drastic measures. They discharged the CEO of Disney, Ron Miller, and replaced him with... Michael Eisner. Eisner, together with Frank Wells, rebuilt Disney into the powerhouse that, paradoxically, was always there.
Today, we find that Disney hasn't had a hit movie (of its own) in years, and Disneyland California Adventure hasn't been the big tourist draw that was anticipated. And while a third-rate cable company with delusions of grandeur hardly conjures up the same sordid imagery as a soulless Wall Street raider, the similarities between Disney's situation in the early 1980's and now are eerie. Right down to Roy Disney's displeasure with the whole situation.
For a more complete story of what happened, go find yourself a copy of the book Storming The Magic Kingdom . Sounds like Eisner could use a copy right now...
Schwab
Editor, A1-AAA AmeriCaptions
Nearly impossible to hide that (the strange trading patterns would setoff alarm bells in both govermental and private stock monitoring systems) and once you have more than 2.5 or 5.0 percent of a companies stock you have to report it to the SEC.
WTF? This gets modded up?
Doesn't anyone outside of business school learn basic economics anymore???
Selling Disney shares when this deal hit the street would have been contrary to common sense if you were "signing off on the deal."
Investors who believed in this deal would have BOUGHT Disney shares until they were priced the same as the Comcast offer. If you know I'll buy your shares of Disney stock on Friday for $44, and you can buy them from the market on Thursday for $34, would you buy? Sure you would. More people would buy in this situation, causing the price to rise toward the offer price. When the offer price is reached, the market may even go higher if enough people think the offer is too low, or if they think someone else will come in a make a larger offer. The market for Disney shares went up because enough investors DID believe this deal was possible. The market for Disney shares went higher than the Comcast offer because investors believe that Disney was being sold too cheap; that Comcast's offer was lower than it should have been.
The price variance of the target company is mostly related to the offer price and the odds of the deal going through, and the odds of a third party "white knight" coming in and upping the bid, although there are a lot more factors involved. The price variance of a predator company is much, much more complex and not something that can be taught in a
No one sells below the offered price because they "sign off on the deal" unless they're stupid, and stupid investors can't last long in the market because the market takes all their money. Investors are herd of hungry cattle looking for profit. Selling a stock for $34 when it has an open pending offer to buy the stock for $44 is stupid unless you believe the buyer won't complete the purchase and the intrinsic value of the company is less than the offer.
Wow. I'm stunned. I guess this is why I don't come to
The Economist has an article which outlines what the previous post describes and describes how Mr Eisner is now probably the problem.
Judging by, among others, these articles in Slate (here and here); these articles regarding an Eisner biography (here and here); this little gossipy titbit; and this critical letter of resignation from Roy E. Disney, the dissatisfaction with Eisner seems to have been brewing for quite some time.
The liver is evil and must be punished.
Damnit!
The Comcast share price falling and the Disney price rising is JUST ARBITRAGE. It means nothing about what people expect the combined business to do.
If I want to buy company X, I must pay more than the current price (a premium). So, I must offer more of my own stock than I recieve in return:
Slashdot Inc. shares trade at $22; Google Inc. trades at $18. (I'm assuming both companies have identical number of shares for similicities sake...)
As Slashdot, I want to buy Google. So I offer one Slashdot share for every Google share. Google share holders go "hmmm... I get a share worth $22, instead of my one worth $18, good deal".
*BUT* and here's the kicker. There are thousands of arbitrageurs who sense a perfect profit - they SHORT Slashdot (driving the share price down), and BUY GOOGLE (driving it up). So, Slashdot goes down, Google up... it's... just... arbitrage...
Thanks,
Robert
--- My dad's political betting
Outsourcing doesn't just happen in I.T. of course...
Auschwitz, Dachau. WW2 nazi concentration camps
Two key points:
- Comcast will probably up their bid to around $30 per share (or perhaps include more cash instead of a simple stock swap). Analysts don't support a stock price much higher than that.
- Disney board members were hit with at least a half-dozen shareholder lawsuits filed in Los Angeles Superior Court late last week. The suits claim that Eisner, Disney president and chief operating officer Robert Iger and the rest of the board breached their fiduciary duty by failing to give adequate consideration to Comcast's offer in order to entrench themselves in their jobs.
So should Comcast walk away if Disney doesn't bite? Perhaps -- no need throwing more money down the rabbit hole (or mouse hole, in this case). Are there others who could make a run for Disney? Let's see.... Viacom has been mentioned, but ignoring the fact that they already own CBS for a moment, they've stated that they're not interested. GE is in the same boat as Viacom, but in the NBC camp. Time Warner is certainly an option, but would have to figure out which movie studio to keep in order to avoid antitrust issues. There's the "we pay cash" option with Microsoft, but that doesn't make sense unless there was a third player involved, and we all know that Microsoft wouldn't want to partner up with Steve Jobs at Pixar.... would they? Hmmmmm....(there are other suitors mentioned in the above LATimes link, removal of pants required)
This certainly will make this next day/week fairly interesting for a few people.
By law, public companies are required to consider "every legitimate offer". In fact, they are required to consider "every offer", whether it's legitimate or not.
What will be more interesting that what Comcast or Disney do is what the FCC does. The FCC and FTC both should scuttle this deal because when you marry one of the largest cable companies with one of the largest content producers, what you have is a monopoly. Comcast is trying to out-Time Warner, Time Warner.
The deal is bad for competition, bad for freedom of the press, bad for Disney, and worst of all, bad for shareholders. So who's getting rich off this offer (right now)?