M&A

Disney Rejects Comcast Offer

Company also voices strong support for CEO Michael Eisner.
Dave CookFebruary 17, 2004

Late last night the Walt Disney Co. announced that it had rejected the hostile takeover offer launched last Wednesday by Comcast Corp., according to Reuters.

In a statement reported by Dow Jones Business News, the Disney board said “the interests of Disney shareholders, which represents the fundamental priority of the board, would not be served by accepting any proposal that does not reflect fully Disney’s intrinsic value and earnings prospects.” The statement added that the board “has confidence in the business, financial and creative direction of Disney under the leadership of [CEO] Michael Eisner and his management team.”

Comcast, the nation’s largest cable operator, originally proposed to exchange 0.78 of a Comcast class A share for each Disney share, valuing Disney at $26.47 a share, or 10 percent over the company’s closing price last Tuesday.

Comcast valued the deal as a whole at $66 billion, including the assumption of $11.9 billion in debt. The value of the deal sank throughout last Wednesday, however, as shares of Comcast fell nearly 8 percent. Comcast’s offer currently works out to a valuation of about $23 a share, according to Reuters, below Disney’s closing price of $26.92 on Friday. The U.S. financial markets were closed on Monday for the President’s Day holiday.

Disney’s statement of support for Eisner follows last week’s recommendation by independent corporate governance analyst Institutional Shareholder Services that shareholders vote against reelecting Eisner to the board. The Disney family, led by former director Roy Disney, is also campaigning to oust Eisner.