Walt Disney's board of directors rejected Comcast's unsolicited acquisition bid on Monday, setting up a potential hostile takeover fight that would be one of the largest in US corporate history.
Disney's board said in a written statement that it has full confidence in the business and creative leadership of Disney Chairman and CEO Michael Eisner and in Disney's "current structure and strategy" as a path to maximum shareholder value. However, the board also suggested that it deemed Comcast's proposal a lowball bid, and that it would consider a sweetened offer.
Comcast offered a deal it valued at $66 billion, including a stock swap and the assumption of $11.9 billion of Disney's debt. But Comcast's share price has dropped since the company announced its offer on Wednesday, while Disney shares have climbed in value. Those divergent trading patterns eroded the premium offered by Comcast, initially valued at 10 per cent based on Tuesday's closing prices. Comcast is offering 0.78 of a Comcast share for each Disney share.
"We are committed to creating shareholder value now and in the future and will carefully consider any legitimate proposal that would accomplish that objective," Disney's board said on Monday. "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."
A Comcast representative did not immediately respond to a request for comment. Comcast President and CEO Brian Roberts said last Wednesday that he hoped an amicable deal with Disney's board could be struck, but left open the question of what steps Comcast would take next in the event of a rejection.
"We're just not going to go into any of those comments today," he said at a press conference. The company's options now include dropping its pursuit of Disney, raising its bid, or initiating a tender offer directly to Disney's shareholders.