Share bid no fun at Disney

Press, 14 June 1984, Page 28

Share bid no fun at Disney

NZPA-Reuter New York Walt Disney Productions, creators of famous cartoon characters like Mickey Mouse and Donald Duck, has fought off a threat to its independence by buying back 11.1 per cent of its shares held by the Reliance group, run by the financier, Mr Saul Steinberg.

The move ended Reliance’s bid to take over Disney and netted Steinberg a gross profit of SNZ92 million on his investment of S4O9M. Reliance said last week it had put together a group that was offering $103.90 a share for 49.9 per cent of Disney. Disney’s board of directors met in Burbank, California. on Monday and decided to repurchase, for $lO9 a share, the 4,198,333 Disney shares held by Reliance. The total cost to Disney was $457.9M plus S43M for Reliance’s expenses.

Reliance, in turn, agreed to withdraw its proposed

tender offer for Disney shares and not to acquire any additional shares in the entertainment company for 10 years. Disney’s share price, which had risen from about $61.60, fell sharply after the news that Reliance had sold and at the close of trading on the west coast its price was down to $83.50, a drop of almost $l4 on the day. For months, Wall Street has argued about a fair price for Disney, and some published reports have estimated its value as high as $154 a share.

Disney has seen its profits tumble in the last few years. Its troubles began early this year when Roy Disney, a nephew of the cartoonis’t, Walt Disney, resigned from the company’s board. The move sparked speculation on Wall Street about the possibility off Roy’s attempting to acquire the company, which his father co-founded with Walt, who

died in 1966. Months later, the Reliance group surfaced with a large block of Disney stock and last week announced it had teamed up with Kirk Kerkorian's Tracinda Corporation (Kerkorian is also a major investor in MGMUA Entertainment) and Fisher Financial and Development. a New York investment firm, to make a tender offer for stock of the entertainment company.

Steinberg, a millionaire, who started the Leasco Computer Company, at first said he was a passive investor in Disney. But Wall Street scented a take-over battle and began piling into the shares. Reliance then said it wanted to raise its stake to 49.9 per cent at $103.90 a share, and would pay $6.50 more if the Disney board endorsed the offer.

Filings by the Reliance group indicated that it planned to divide up Disentertainment, film

and real estate holdings.

If successful, the Reliance group would have gained control of the Disney name as well as 29 years of television shows, many of them classic animated cartoons. Disney also has a library of some 175 feature films, none of which has ever been released on video cassette or to cable television.

Disney owns the Disneyland amusement park in California, and the newer Disneyworld and Epcot Centre in Florida. These are linked to large tracts of land, some of it undeveloped.

Last week Disney completed the acquisition of the Arvida Real Estate Company in a transaction believed to be intended to make Disney less vulnerable to a take-over. In another deal to protect its independence, Disney also agreed to acquire Gibson Greetings, a card company.