Comcast Launches Disney Bid


Comcast Corp. stunned the investment community early Wednesday, launching an unsolicited bid for media giant The Walt Disney Co. in a stock swap that values the entertainment icon at $66 billion.

According to a press release, Comcast proposed issuing 0.78 shares of Comcast class-A voting common stock for each Disney share. Disney shareholders would receive a premium of more than $5 billion, based on Tuesday’s closing prices, plus full participation in the combination benefits.

Comcast’s proposal values Disney at $66 billion (which includes assumption of $11.9 billion of Disney’s net debt), offering a multiple of approximately 14 times Disney’s 2004 estimated EBITDA (earnings before interest, taxes, depreciation and amortization). Disney shareholders would own 42% of the combined company.

"This is a unique opportunity for all shareholders of Comcast and Disney to create a new leader of the entertainment and communications industry," Comcast president and CEO Brian Roberts said in a prepared statement. "Not only would this merger create significant shareholder value, but it would also position the combined company to compete vigorously with other entertainment and communications companies, including newly created integrated distribution/content providers."

Comcast is being advised by Morgan Stanley Dean Witter & Co., J.P. Morgan Chase & Co., Quadrangle Group LLC and Rohatyn Associates LLC. Davis Polk & Wardwell is the legal advisor to Comcast.

According to a letter to Disney chairman Michael Eisner dated Feb. 11, Roberts proposed the deal earlier in the week but was rebuffed.

"It is unfortunate that you are not willing to do so," Roberts wrote. "Given this, the only way for us to proceed is to make a public proposal directly to you and your board."