Mouse won’t bite on offer

Comcast stock bid rebuffed

Disney directors rejected Comcast’s takeover bid on Presidents Day, calling the offer too skimpy.

In a brief statement issued late Monday, board members of the Burbank-based conglom announced their unanimous rejection of the cable company’s hostile bid. Directors cited a “deficit of value” in the offer, valued at $66 billion when Comcast first announced the offer Wednesday.

Wall Street reconvenes today following its Prexy Day hiatus, with many analysts expecting Comcast to sweeten its offer eventually. But so far there’s scant sign of any rival bid for the Magic Kingdom, so the cabler could proceed cautiously.

Comcast has offered to swap 0.78 of a share of its stock for each Disney share outstanding. But Mouse shares have risen and Comcast’s fallen since the bid was announced, so an offer intended to show Disney shareholders a slight premium now reps “a deficit of value,” according to the Mouse board’s statement.

“We are committed to creating shareholder value now and in the future and will carefully consider any legitimate proposal that would accomplish that objective,” the board said. “In any proposal by Comcast or any other company, the board will consider and assess the value to be received in exchange for the shares of Disney and also the appropriate premium to reflect the full value of Disney.”

The comments were clearly directed to a handful of Disney shareholders who recently filed suit in L.A. and elsewhere, claiming the board had failed to give Comcast’s offer fair consideration.

In its statement, the Disney board also rejected recent calls for a change in management at the company.

“The board has confidence in the business, financial and creative direction of Disney under the leadership of Michael Eisner and his management team,” the board said.

“Furthermore, the board expects the company’s current structure and strategy will maximize shareholder value. 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.”

Investment bankers from Goldman Sachs and Bear Stearns have been meeting with Disney brass to help formulate corporate strategies for dealing with the hostile bid from Comcast. Some have speculated that the Mouse could make its own costly acquisition to thwart any takeover of Disney, but conglom’s board mentioned no other intended response other than its nixing of the Comcast bid as offered.

There was no stock market activity Monday due to the Presidents Day holiday.

On Friday, Disney shares closed at $26.92, marking a $1.08 decline after two days of trading gains. Comcast shares Friday fell 16¢ to $29.90.

Some analysts believe Comcast could raise its bid by throwing in some cash or sweetening its stock swap to as much as 1.1 Comcast shares for each Mouse share. In its original formulation, the Comcast offer reps a per-share deficit of $3.60 to Disney shareholders, conglom’s board said.

The current offer includes Comcast stock valued at about $48 billion – down from $54 billion when originally announced – and the assumption of almost $12 billion in Disney debt.

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