Sign in Subscribe
Business planning

Comcast Launches Hostile Bid for Walt Disney

Strategic Insights

— 2 min read

Comcast, a US cable operator, has launched a surprise Dollars 62.5bn hostile bid for Walt Disney to create the world's largest media group. The attempt to create a new force in television and film distribution marks the biggest challenge yet to Michael Eisner, Disney's long-serving chairman and chief executive. Tensions among shareholders and board directors at Disney have been rising due to years of poor results, and the company's collapse of its lucrative partnership with Pixar, a highly successful animation studio. Comcast's unsolicited offer, which includes Dollars 11.9bn of debt, is seen as a bold and potentially risky step in the group's history of dealmaking.

Key Takeaways:

  • Comcast's hostile bid for Walt Disney represents the largest media takeover bid in history, with an offer of Dollars 62.5bn, a Dollars 5bn premium to Disney's market value on Tuesday night.
  • The bid would create the world's largest media group by capitalisation, overtaking Time Warner, Viacom, and News Corp, with a combined value of over Dollars 90bn.
  • Michael Eisner, Disney's long-serving chairman and chief executive, faces his biggest challenge yet, with the company's board specifying that they will "carefully evaluate" the offer.
  • Tensions among shareholders and board directors at Disney have been rising due to years of poor results, including the collapse of its lucrative partnership with Pixar, and a failed merger with Pixar.
  • Comcast's financial firepower and lack of immediate overlaps with Disney have made it one of the few media groups that could take over Disney without risking major regulatory hurdles.
  • The bid marks a significant move in the consolidation of the global media industry, with January and February on course to see mergers worth Dollars 365bn, more than in any comparable period since early 2000.
  • Investors are expecting a higher bid after Disney shares jumped 13 per cent to Dollars 27.32 on the news, with Comcast shares down almost 7 per cent at Dollars 31.73.

Statistics:

  • Comcast's offer price is 0.78 of its Class A voting shares for each Disney share.
  • The bid values Disney's market capitalisation at Dollars 62.5bn.
  • The offer includes Dollars 11.9bn of debt.
  • Disney's market value was Dollars 57.5bn on Tuesday night, before the bid was announced.
  • Time Warner, Viacom, and News Corp's combined market capitalisation is over Dollars 70bn.
  • Comcast's reach is estimated at 21m US subscribers through its pay-TV network.
  • January and February are on course to see mergers worth Dollars 365bn, more than in any comparable period since early 2000.

Sources:

  • "Comcast launches surprise Dollars 62.5bn bid for Disney" by Tim Burt and Peter Thal Larsen, Financial Times, February [no date specified]
  • "Disney board will 'carefully evaluate' Comcast bid" by Peter Thal Larsen, Financial Times, February [no date specified]
  • "Comcast's bid for Disney marks significant move in media consolidation" by Alison Beard, Financial Times, February [no date specified]

Read more