Walt Disney Co's board said on Monday it had unanimously rejected cable operator Comcast Corp's unsolicited takeover bid as too low and endorsed chief executive and chairman Michael Eisner and his strategy for the company.
The Disney board said it would carefully consider any "legitimate proposal" that created shareholder value. Comcast, which vowed it would be a disciplined bidder, almost immediately shot back that its proposal was "compelling" and "sound."
The Disney board gave its backing to Eisner and said it expected the company's current structure and strategy would maximize shareholder value.
Eisner has said Disney is doing well as a stand-alone content provider. Meanwhile rivals like Time Warner Inc and News Corp have struck deals to merge content and distribution, the same strategy Comcast proposes.
"The board has confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team," Disney's board said in a statement.
"The interests of Disney shareholders, which represent the fundamental priority of the board, would not be served by accepting any acquisition proposal that does not reflect fully Disney's intrinsic value and earnings prospects," the board also said.
Comcast, the nation's largest cable TV company, last week made a surprise bid to acquire Disney, an entertainment icon which owns Hollywood's top studio, the ABC television network and the cable sports network ESPN.
Comcast chief executive officer Brian Roberts said last week that Comcast made its offer directly to Disney's board after Eisner had rejected the offer.
The value of the all-stock bid sank to less than US$48 billion in Comcast stock on Friday from an initial value of US$54 billion, but Comcast on Monday said its offer was fair.
Sanford Bernstein analyst Craig Moffett said that Comcast did not need to hurry and could engage in a patient game of brinkmanship.
"Time is on Comcast's side. There's no urgency to either withdraw or up their offer," he said.
"Comcast can sit on the sidelines here for months until their share price has recovered. And if no other bidder materializes, Disney's stock could well sink back a bit and shareholders could be more receptive to an alternative offer down the road," he said.
Other analysts have said it is unlikely that a rival bidder will emerge, given the size of the transaction and potential regulatory hurdles.
Investors bid up Disney shares immediately after the Comcast bid, expecting the offer to be raised.
Disney shares ended the week at US$26.92 compared with their implied value in Comcast stock of just US$23.32, a deficit of US$3.60 per share that the Disney board noted in its statement.
The voice of support for Eisner comes after independent corporate governance analyst Institutional Shareholder Services, a strong influence on Wall Street, recommended last week that shareholders vote against re-electing Eisner to the board at the annual meeting scheduled for March 3.
The Disney family, led by former director Roy Disney, also is spearheading a campaign for Eisner's ouster.
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