Cable Operators

Disney Board Nixes Comcast Offer

2/17/2004 3:02 AM Eastern

As expected, the board of directors of The Walt Disney Co. rejected Comcast Corp.’s unsolicited bid for the company as too low, issuing a vote of confidence to beleaguered chairman Michael Eisner but also opening the door for larger offers.

Disney was expected to turn down Comcast’s all-stock offer because the appreciation in Disney shares has erased any premium. As of Friday’s close, the Comcast offer valued Disney shares at $23.32 each, about $3.60 below Disney’s Friday trading price of $26.92 per share.

Disney stock fell 2 cents in Tuesday trading to $26.90 each, while Comcast was up 85 cents to $30.75 per share.

"We are committed to creating shareholder value now and in the future, and we will carefully consider any legitimate proposal that would accomplish that objective," the Disney board said in a prepared statement.

"In any proposal by Comcast or any other company, the board will consider and assess the value to be received in exchange for the shares of Disney, and also the appropriate premium to reflect the full value of Disney," the company added. "The board has confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team."

For the moment, it appears that Comcast is sticking to its original offer and has no plans to sweeten it.

"Our proposal to acquire The Walt Disney Co. reflects a full and generous valuation based upon Disney’s prospects and performance over a long period of time, representing a significant premium over Disney’s unaffected share price during any relevant measurement period over the last three years," Comcast said in a prepared statement.

"We maintain the belief that our merger proposal represents a sound and compelling proposition for both sets of shareholders," the MSO added.

Some analysts have said that Disney could fetch between $35-$38 per share if it was sold now. However, those same analysts believe it is unlikely that any new bidders will enter the picture to help drive up the price, or that Comcast will be in a rush to increase its bid.

Two potential suitors have already dropped out of the race: News Corp. chairman Rupert Murdoch and Viacom Inc. president and chief operating officer Mel Karmazin have said in published reports that they have no interest in pursuing Disney.

September