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Tuesday, February 17, 2004
 

Disney Board Rejects Comcast Offer: The Disney Board of Directors unanimously rejected Comcast's bid to purchase the company, saying the offer undervalued the stock of the corporation. The Board also re-affirmed its support of CEO Michael Eisner. The rejection by no means ends Comcast's bid, however, as the company, which holds Disney stock, now most likely will attempt a proxy contest to attempt to win control of the Disney Board.

Comcast will have an easier road in staging a hostile bid due to the limited anti-takeover measures in the Disney charter and by-laws, which makes it "easy prey" for a potential bidder. Disney has neither a "poison pill" nor a staggered board, meaning that a potential bidder can buy up as much stock in the company as it wishes and can run a full-slate of opposition directors in the next corporate election. Other defenses also seem unavailable to Disney. The company does not appear to have the resources necessary for a "Pac Man" defense, in which a company buys up assets, making it too large to be purchased. And Disney's corporate culture and reputation would be put on the line by a "scorched earth" defense, in which a company sells off many of its assets, making it unattractive to the potential bidder.

The LA Times wonders if there are other bidders "waiting to pounce," now that Comcast has been rejected. In many cases, a company can be saved from a hostile bidder by a "white knight," a friendly bidder that swoops in and acquires the company before the hostile takeover can be completed. However, there appears to be no taker in this case, as Viacom and others have shown no interest in obtaining Disney.

Analysis of the proposed merger continues to be mixed. Eric Gillin of TheStreet.com describes the merger as "a good match of pricey assets" but says the proposal looks eerily similar to the largely unsuccessful recent AOL-Time Warner merger.