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Disney’s trust sells Mouse House stake

Credit Suisse to gain 44% of holdings

Roy Disney’s family trust has agreed to sell a big chunk of the Disney vice chairman’s Mouse House holdings — worth more than $160 million — to investment bank Credit Suisse First Boston.

In a complex “forward transaction,” the trust has agreed to sell within five years some 7.5 million shares — or 44% of its Mouse stock — or alternately to reclaim the shares for a cash payment. Terms will allow the trust to benefit from future Disney stock gains and also provide protection against a possible share price decline.

A spokesman for Roy Disney’s Shamrock Holdings investment vehicle, which issued a press release on the stock sale, said the transaction aims to take advantage of a sophisticated investment strategy that’s become popular of late.

“This technique has been around for six or seven years but has grown in popularity over the past two or three years,” Shamrock spokesman Clifford Miller said. “It was brought to our attention as a way for Roy to diversify on the one hand while retaining voting control over the next five years.”

The vice chairman intends to keep his board post and continue “as an active and committed director,” Miller stressed.

“He feels (Disney) stock has upside potential and will still have 10 million shares,” the spokesman added. “So obviously he wants the stock to do well and appreciate. That would be in everybody’s interest.”

But Sanders Morris Harris analyst David Miller said the trust’s transaction appears to reflect a belief that Mouse shares are fully valued at present.

“That’s exactly our belief, which is why we have a ‘hold’ rating on the stock,” Miller said.

He added the move doesn’t necessarily signal any lack of confidence in Disney management, however. “I don’t really read it like that,” Miller said.

The Roy Disney trust ranks as the 17th largest Mouse shareholder and conglom’s largest non-institutional shareholder, though its holdings rep less than 1% of conglom’s shares outstanding.

Disney also issued a statement on the trust’s stock sale.

“Roy E. Disney, who with his family is and will remain among the largest shareholders in the Walt Disney Co., has undertaken this transaction to diversify his investment portfolio,” conglom said. “A transaction of this type by someone in Roy’s position has become increasingly common. Within the last year, more than 40 directors or executive officers from American corporations have reported that they have engaged in transactions of this type with respect to large stock holdings in their companies.”

Mouse shares fell 25¢ to $21.98 on Wednesday. The stock has gained 35% since Dec. 31.