Cable operator Comcast Corp on Wednesday launched a surprise bid to buy Walt Disney Co for about US$50 billion in stock, a deal that would create the world's largest media company and further threatens embattled Disney chief executive Michael Eisner.
Comcast chief executive Brian Roberts said he made the unsolicited all-stock offer public after Eisner personally turned it down on Monday. Eisner was already under fire from Disney founding-family shareholders bent on ousting him.
PHOTO: EPA
The proposed deal could redraw the US media landscape, inviting comparisons with the merger of America Online and Time Warner that closed in 2001, which was initially much heralded but dismally failed to meet expectations.
The Disney board met on Wednesday and asked bank advisers to analyze the offer, which would join the No. 1 US cable operator with Hollywood's top film studio, broadcaster ABC, sports channel ESPN, worldwide theme parks and a stable of animated characters from Mickey Mouse to the Lion King.
Disney and Comcast would follow in the footsteps of Time Warner and News Corp, both merger-forged media conglomerates that also combine programming and TV distribution. But a Disney-Comcast combination would overpower its two rivals by revenue.
Investors bid up Disney shares as much as 16 percent, while Comcast shares fell as much as 9 percent, as investors bet that the Comcast offer would be raised or topped by a rival.
"The price is too low," said Mel Tukman of Tukman Capital Management, which manages 15 million shares of Disney. "[Disney executives] are managing to improve fundamentals on almost every front while this is happening."
Comcast's offer, which would exchange 0.78 of a Comcast class A share for each Disney share, originally valued Disney at US$26.47 a share, a 10 percent premium to Tuesday's close.
Disney shares touched US$27.95, their highest level since July 2001, in heavy trade of 70 million shares on Wednesday, some nine times the average turnover in the past three months.
Roberts, considered one of the media industry's savviest dealmakers, sent Eisner an open letter saying it was "unfortunate" that the Disney chairman and chief executive had rejected friendly merger talks.
"Given this, the only way for us to proceed is to make a public proposal directly to you and your board," Roberts said.
He also vowed Comcast would be a disciplined buyer. "We've walked away before," he told reporters.
Merrill Lynch analyst Jessica Reif Cohen called the proposed merger a "perfect, brilliant combination." But she cut her rating on Comcast to "neutral" from "buy," saying its shares would be under pressure.
Comcast executive vice president Stephen Burke, who spent 12 years at Disney, said Comcast could squeeze US$800 million to US$1.2 billion in additional cash flow within three years. The cable operator plans to make operations run more smoothly and to launch new channels in conjunction with Disney.
The Comcast bid comes as Roy Disney, the nephew of company founder Walt Disney and a former board member, ramps up his bid to unseat Eisner, whom he accuses of mismanaging the company over the past decade and draining Disney's creative strength.
Disney on Wednesday reported earnings rose to US$688 million, or US$0.33 a share, in its fiscal first quarter ended in December, from US$36 million, or US$0.02 a share, a year earlier. The results, while overshadowed by the Comcast offer, topped the Wall Street consensus of US$0.23 per share.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS