Comcast's Bid May Not Spark Bidding War

[Shaman]

Stock down....other articles here.

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Comcast's Bid for Disney May Not Spark Bidding War
2/13/04 3:15am

Shares of Walt Disney Co. (DIS) have surged 16% since Comcast Corp. (CMCSK) unveiled its unsolicited takeover offer Wednesday, but investors expecting an escalating bidding war may be disappointed, Friday's Wall Street Journal reported.

The view of most investors is that Comcast has made an initial offer, with more-lucrative bids from a bevy of possible suitors surely on the way.

But a look at Disney's stock price -- $28 at Thursday's close, up 1.45% -- and at how much value is untapped at the company, suggests investors may be disappointed. Many analysts say it will be hard to get to a price much more than $31 a share for Disney, even after taking into consideration substantial cost savings and additional growth that new management can squeeze out of the entertainment giant. Philadelphia-based Comcast's current stock bid is valued at $23.45 a share at Thursday's closing price.

"Even in a bidding war, you're likely to see [an acquisition price] close to $ 28 to $30 a share," says Cristina Suarez, portfolio manager at Mellon HBV Alternative Strategies, a New York hedge fund that specializes in takeover deals and similar situations. "The bidder list is narrow."

Disney bulls are hoping that several suitors emerge willing to pay more than they should for the once-in-a-lifetime opportunity to control Disney's trove of well-known assets.

Wall Street Journal Staff Reporters Gregory Zuckerman, Emily Nelson and Dennis K. Berman contributed to this article.

 

[JBSLJames]

If a deal does not happen, or if more suitors don't get involved, look for the Disney stock to take a big hit when the dust settles.

Initial interest drives the stock up. Failure to cement the deal (with who-ever ends up grabbing the gold ring) will drop the bottom out. Seen it happen. Not Pretty.

 

[Shaman]

Originally posted by JBSLJames
If a deal does not happen, or if more suitors don't get involved, look for the Disney stock to take a big hit when the dust settles.

Initial interest drives the stock up. Failure to cement the deal (with who-ever ends up grabbing the gold ring) will drop the bottom out. Seen it happen. Not Pretty.

However, if Eisner is booted and replaced with some one, it could give the stock a jump start...atleast buy some time....I'm sure there are other things that can be done....aren't there?

:veryconfu

 

[JBSLJames]

Originally posted by objr
However, if Eisner is booted and replaced with some one, it could give the stock a jump start...atleast buy some time....I'm sure there are other things that can be done....aren't there?

:veryconfu

We can always hope, or pray, but you didn't hear me say that. I do know that when P&G got rid of Dirk and brought in a familiar name, the stock did jump into positive territory.

 

[GaryT977]

The business section of USA Today said:

"One observer suggests that even if Disney survives, Eisner's 20 year hold on the Magic Kingdom will not."

"'Eisner is a goner,' predicts Anthony Sabino, law professor at the Peter J. Tobin School of Business at St. John's University in New York. 'He'll either be ousted or a clear successor will be anointed. Either way, the end of the Eisner regime is in sight.'"

 

[Shaman]

New article up...hit the link on the original post:

It seems Comcast shareholders aren't all that crazy about the Disney bid....

But despite management's enthusiastic talk about the advantages of combining media with distribution, there is some skepticism that such a combination would not yield all the synergies promised.

Disney stock went down today losing more than a dollar...is this the beginning to the down trend, or just a bump in the road?

 

[GaryT977]

Everything I've read since the offer was made is that the guy running Comcast is a very crafty operator, and very patient. They'll probably have to up the offer, but from what I've read, unless some kind of white knight appears, eventually Comcast will own Disney.

I'm not sure how I feel about this. I hated cable so much that I dropped it for DirecTV years ago. Even with the occasional rain fade, it's much more reliable that cable ever was, and it's customer service is worlds better. Besides, what does a cable company know about running theme parks?

On the upside, they've got lots of money, and as Tokyo DisneySea demonstrates, when the imagineers have a nice budget, they can do amazing things.

Hopefully, they'll ask the people who run and design the parks what they need, then give them the money and stay out of the way.

 

[brisem]

On CNBC yesterday on Cramer's 5:30 spot, they talked about Disney. The 2 interesting points they made were:
1) the Magic number for institutional investors will be $32-$33 per a share offer.
2) A situation that could happen is Eisner takes one for the team and retires. The Board then appoints a new CEO. This should spark an increase in the price of the stock. Which makes it harder to be taken over.

 

[Shaman]

Originally posted by brisem
2) A situation that could happen is Eisner takes one for the team and retires. The Board then appoints a new CEO. This should spark an increase in the price of the stock. Which makes it harder to be taken over.

If Eisner does...wow I would be sooo stunned that I think it would even change my opinion about him...

:hammer:

 

[MrPromey]

Originally posted by objr
If Eisner does...wow I would be sooo stunned that I think it would even change my opinion about him...

:hammer:

Three reasons why Eisner would be willing to do something like this:

1.) He has been very vocal over the years in the belief that Disney should remain an independent company. Say what you want about him and his ego but he has done some amazing things over the span of the past twenty years which has turned Disney from a small company that was essentially an animation studio with *some* live action and a few theme parks into one of the largest media companies in the world with the ability to distribute just about anything anywhere. Some people around here (aka Griz) may not like this but Disney having their fingers in so many big pies is probably the reason we haven’t seen many who actually could take them over up to this point with the ever changing landscape of business and entertainment. The guy has invested 20 years of his life into this. If for no reason beyond personal ego, I don’t think he wants to see Disney be reduced to a branding mechanism for some other company.

2.) Eisner is one of the largest individual shareholders in Disney stock. He has just as much interest in seeing the company do well as anyone else and in fact, more than most. If he honestly has to worry about the fate of a fortune of his falling under control of people who want to steal his company, he’s likely to be more inclined to do what many consider the “right thing”

3.) Last but not least and probably the most convincing argument would be that if he at some point saw only two possible choices: Leave and save Disney or stay, have Comcast take over and then boot him, he has every reason to leave and almost none to stay. I mean, what would he really have to loose at that point?

Actually, to me the best possible way this could play out would be for him to stay and fight and for Roy in light of the current situation to back him in that fight under the condition that a solid succession plan would be put in place to have Eisner out within the next four to five years.

I think this would accomplish a few things that would make most people happy.

First, regardless of what anyone says about him. Eisner is shrewd. I would personally feel safer having him fight this battle at the moment than someone stepping in from the outside and there doesn’t really seem like there is anyone within the company up to the task at this point either.

Saving the company on the way out the way he did on the way in would save an enormous amount of face for Eisner when he leaves. Instead of being regarded as the guy who drove Disney down and who had to be shoe-horned off the throne, he would be judged by history more on what he did for the company over the whole of his 20-25 year reign which is incredibly significant.

This would also bring Roy back into the fold which would go a long ways to restoring fan comfort and faith by non-institutional investors who include sentiment into their investment strategies.

This would also give Disney the chance to pick and then prepare someone new for stepping in by slowly handing power over to those who would replace Eisner. Also, this would ensure that if there were any bumps in the road during that period, there would be someone who had weathered such things before near by. It would also probably calm investor fears of the uncertainty that comes when a company slaps a stranger at the helm. I think this would also make leaving easier for Eisner because handing things over incrementally is a lot different from showing up to your office to pick up your belongings only to discover they replaced all the locks on the doors the day you retired.

I honestly don’t see my plan ever going into effect but is this something that most people here could live with?

 

[Pat X]

Quite simply...HELL YES!!!! :sohappy: