Comcast make $54.1bn hostile bid for embattled Walt Disney Co

COMCAST CORP, the largest US cable company, made a hostile bid to buy Walt Disney Co. for $54.1 billion in stock, increasing pressure on Disney Chief Executive Michael Eisner, as former directors seek to oust him.

Comcast CEO Brian Roberts said in a letter that Eisner was “unwilling’ to consider the offer, which would create the world’s largest media company. Philadelphia-based Comcast would pay $26.47 a share for Disney, a 9.9% premium over yesterday’s price, and assume $11.9 billion in debt. Disney shareholders would own 42% of the combined company.

Comcast’s surprise bid comes as Eisner tries to deflect criticism from two former Disney directors.

Roy Disney, the nephew of founder Walt Disney, and Stanley Gold are lobbying shareholders to remove Eisner, saying he mismanaged the company, failing to provide a succession plan. “Roberts sees Eisner in a weak position and wants to make his move while there’s discontent on the board,” said James McGlynn, who helps manage about $6bn, including Comcast shares, at Summit Investment Partners in Cincinnati. “They’ve been successful going after companies under siege.” Roy Disney and Gold declined to comment on Comcast’s bid. Disney spokesman John Spelich declined to comment on the proposal as well.

Disney shares yesterday rose above the offer price, a signal that investors expect Comcast will raise its bid.

“If they really want this thing, which I think they should, they need to go higher,” State Street Research & Management analyst Larry Haverty said in a televised interview with Bloomberg News. “This is the first inning, in my opinion.”

Shares of Burbank, California-based Disney rose $3.62, or 15%, to $27.70 at 10:24am in New York Stock Exchange composite trading. Comcast Class A shares fell $2.70, or 8%, to $31.23 in Nasdaq Stock Market composite trading.

Eisner, aged 61, met shareholders yesterday in Orlando, Florida, after the company reported fiscal first-quarter results. Disney’s film division led the company to higher profit, helped by the success of “Pirates of the Caribbean” and “Finding Nemo”.