Euro Disney may be target of hostile takeover bid

[crazy4wdw]

UPDATE: Center-Tainment Says Spoke To Euro Disney On Bid

November 29, 2006: 02:27 PM EST

DOW JONES NEWSWIRES

Center-Tainment AG (G5N.XE) Chief Executive Ulf H. Werner said Wednesday that his company had contacted theme park operator Euro Disney (12587.FR) about his planned takeover bid and had got a "reserved" reaction.

A spokesman for Euro Disney said: "We've not received any offer from this company. We don't know them."

Another Euro Disney spokesman, Pieter Boterman, added: "Center-Tainment sent us an e-mail two weeks ago asking us to set up a meeting with our CEO, Karl Holz. They didn't specify what they wanted to talk about or mention anything related to a takeover.

"We replied that before we can set up a meeting, we would like to know a little bit more about them and asked them to present themselves. They have never responded. If they say that they have had direct contact with us, that's as far as it went," the Euro Disney spokesman added.

Center-Tainment's Werner was speaking by phone with Dow Jones Newswires after it was reported that his little-known company wanted to take over the Paris- listed Euro Disney and eject Walt Disney Co. (DIS) as the operator of the theme park.

Center-Tainment was listed in September but is thinly traded. Just 50 shares changed hands Wednesday. At its last traded price of EUR18, it has a market value of EUR180 million.

Still, reports of Center-Tainment's move led to Euro Disney shares rising 29% to EUR0.09 late Wednesday. Before the reports, Euro Disney's market value was about EUR270 million.

Kurt Andreesen, an adviser to Werner, said Center-Tainment has 45 shareholders but declined to disclose their identity.

A statement from Center-Tainment's offices said the company was formed expressly to initiate a public exchange offer for Euro Disney shares, with the aim of getting at least 50.1%.

After reaching that level, it would replace Euro Disney management, terminate the operating contract with Disney Co. and run the park itself. It said the exchange would leave Euro Disney shareholders with shares worth EUR0.11 against the EUR0.06 level at which they were trading before the Center-Tainment statement was reported.

Center-Tainment said it would hold a news conference Thursday to explain the bid.

Euro Disney said late Wednesday that its management was aware that a company based in Switzerland had scheduled a news conference for Thursday to announce its intention to launch a takeover of Euro Disney.

"Despite our attempts to obtain information from them, we have been unable to secure material information on this company," it added.

It added that Euro Disney remained focused on its long-term growth strategy and was committed to building on the progress achieved in the past year.

A Paris-based analyst urged caution, saying Euro Disney would be a difficult target for a hostile takeover as it is a partnership by shares. He said the procedure looked "unusual."

Center-Tainment's statement said: "Behind the curtain, Center-Tainment is advised by very experienced and influential managers of the leisure industry."

CEO Werner told Dow Jones Newswires he previously worked as a banker for a large German institution but declined to name it.

Andreesen, the adviser to Werner, separately told Dow Jones Newswires that French financial markets watchdog Autorite des Marches Financiers had been told of Center-Tainment's intention.

AMF officials weren't immediately available for comment.

-By David Pearson and Archibald Preuschat, Dow Jones Newswires

 

[DancingBear]

So they think they can just "terminate the operating contract" with Disney and run the park themselves? Huh?

 

[jimh13432]

good. So much for that boat anchor.

 

[MJMcBride]

good riddance to bad rubbish

 

[DancingBear]

Is it really that bad? My understanding was that (notwithstanding that perhaps it should be located in Spain instead) Disneyland itself is well done, but it's the Studios and the overbuilding of hotels that created the debt problems.

 

[Mecha Figment]

I don't know why they keep refering it to Euro disney, it' hasn't been that in years. I doubt any kind of hostle take over will be permited by the company. More then likely if they try this disney will take over their company and screw them back in the end.

 

[Horace Horsecollar]

I don't know why they keep refering it to Euro disney, it' hasn't been that in years. I doubt any kind of hostle take over will be permited by the company. More then likely if they try this disney will take over their company and screw them back in the end.

The name of the company has always been Euro Disney S.C.A. — and that's still the name of the company.

The name of the company's resort is Disneyland Resort Paris.

The current ownership of Euro Disney S.C.A. is:
— The Walt Disney Company: approx. 39%
— Prince Al-Waleed bin Talal: somewhere between 10% and 17.3% (depending who you believe)
— Other shareholders: remainder.

If the offer from Center-Tainment AG is attractive enough to any of the shareholders — even including The Walt Disney Company — then it's possible that Center-Tainment may achieve its objective of getting at least 50.1% ownership. In any case, Disney owns far less than 50%.

Keep in mind that Euro Disney S.C.A. isn't just a theme park company. Euro Disney S.C.A. is also a major real estate developer in suburban Paris.

I'll be interested to see how this develops. In any case, Euro Disney S.C.A. is now in play, and I wouldn't be surprised if there are some major business changes in the company's future.

 

[Another Voice]

And, of course, this could also be Disney's doing in some part.

Robert Iger has made it well known that he sees Disney as a broadcasting company that can produce some of its own content. The company's only strategic moves have been to find new places to "broadcast" - iTunes for example. Even back in the Eisner days there were a lot of people around who thought the theme parks were worthless distractions - that Disney could make more money if Disney simply franchised off the name and let others worry about running them.

And before you got all huffy - remember that this management already shut down Disney Feature Animation and gave away The Disney Stores. There's nothing special about the theme parks - it's just another business under the shadow of ABC.

 

[crazy4wdw]

Swiss company has eye on Euro Disney

Ladka Bauerova | Bloomberg News
Posted November 30, 2006

The latest Disney news

A Swiss company that operates family amusement parks said Wednesday that it was making a hostile takeover bid for Euro Disney SCA, Europe's largest theme-park operator.

Center-Tainment AG, registered in the Swiss canton of Zug, said in an e-mailed statement that it will try to acquire 50.01 percent of Euro Disney's stock through a share swap and gain control over the company's theme parks.

The Swiss company said it will offer Euro Disney's shareholders about 14.5 cents for each of their shares. Euro Disney shares were trading at 8 cents at the time of the announcement. They rose to 12 cents in trading in Paris.

"There have been no discussions on the subject of a takeover," Euro Disney spokesman Pieter Boterman said. In a statement on its Web site, Euro Disney said it had not been able to obtain "material information" about Center-Tainment.

Euro Disney's parent company, Burbank, Calif.-based Walt Disney Co., had no comment.

A spokeswoman for France's stock market regulator said it had no comment on the bid or the stock activity.

Center-Tainment, which describes itself as an operator of family recreation and amusement parks, began trading on the Frankfurt, Germany, stock exchange in September. It has a market value of about $260 million.

A spokesman for the company said it would provide more details of its bid today. Euro Disney, based in Marne-la-Valee, east of Paris, operates two theme parks and develops real estate.

It is controlled by Disney, which owns about 40 percent of the stock. Saudi Prince Alwaleed Bin Talal is the second-biggest investor, holding 10 percent.

Euro Disney has struggled financially.

Revenues for the fiscal year ended Sept. 30 rose 4.5 percent to $1.43 billion, reflecting increases in theme park attendance and hotel occupancy, Euro Disney said. But the net loss was $116.5 million, compared with $69.8 million in the previous year.

Euro Disney's first park, Disneyland, opened in 1992, followed by the Walt Disney Studios park in 2002.

Its chairman and chief executive officer, Karl Holz, is a former Walt Disney World executive and head of the Disney Cruise Line.

 

[Horace Horsecollar]

To those people who have posted that Disney will never let another company succeed at a hostile takeover of Euro Disney S.C.A., allow me to make a few points...

The ideal takeover of Euro Disney S.C.A. would be one that allows The Walt Disney Company to:

• Get out from under the financial uncertainty of the company's stake in Euro Disney S.C.A.
• Turn the stake into capital that can be reinvested elsewhere or that can be used to retire debt.
• Earn substantial money from Euro Disney S.C.A. through licensing fees for attractions, merchandise, and the Disney name — without having any capital tied up in Euro Disney S.C.A.

I assume that any takeover of this magnitude would require a re-negotiation with Disney regarding the use of Disney's intellectual property (unless the original contracts allowed for all sorts of future scenarios). Presumably, Center-Tainment AG feels they can achieve a successful agreement with Disney to keep the parks running, with Disney no longer directly managing the parks and resorts.

Keep in mind that Tokyo Disneyland is owned and operated by Oriental Land Company, but Disney still makes money from it — with no risk and no capital tied up in it.

When Euro Disney was initiated, Michael Eisner wanted to avoid the "mistake" that was made with Tokyo Disneyland. He thought that a substantial financial stake in Euro Disney would allow The Walt Disney Company to make more money than with Tokyo Disneyland. Instead, the losses at Euro Disney hurt The Walt Disney Company.

 

[erikthewise]

And, of course, this could also be Disney's doing in some part.

Robert Iger has made it well known that he sees Disney as a broadcasting company that can produce some of its own content. The company's only strategic moves have been to find new places to "broadcast" - iTunes for example. Even back in the Eisner days there were a lot of people around who thought the theme parks were worthless distractions - that Disney could make more money if Disney simply franchised off the name and let others worry about running them.

And before you got all huffy - remember that this management already shut down Disney Feature Animation and gave away The Disney Stores. There's nothing special about the theme parks - it's just another business under the shadow of ABC.

Just as Time-Warner was once just another business under the shadow of AOL.

It turned out that Time-Warner contained the real permanent value, and AOL was just "vaporware". ABC may be riding high now, but this can change very quickly; it seems like only a couple years ago that ABC was the "boat anchor". The parks (US at least) and associated enterprises are stable assets and consistent money-makers.

 

[Horace Horsecollar]

ABC may be riding high now, but this can change very quickly; it seems like only a couple years ago that ABC was the "boat anchor". The parks (US at least) and associated enterprises are stable assets and consistent money-makers.

But if you were a senior executive at Disney whose roots are in broadcasting, you might see broadcasting as the core business and the theme parks as a capital-intensive, mature business that is only good because it can be milked to provide money to expand the broadcasting empire.

 

[erikthewise]

But if your were a senior executive at Disney whose roots are in broadcasting, you might see broadcasting as the core business and the theme parks as a capital-intensive, mature business that is only good because it can be milked to provide money to expand the broadcasting empire.

Sadly true. Can you (or someone) remind me what Iger's roots are?
For me, I'd rather see ABC owned by Disney than Disney owned by ABC, if you know what I mean...

 

[Horace Horsecollar]

Sadly true. Can you (or someone) remind me what Iger's roots are?
For me, I'd rather see ABC owned by Disney than Disney owned by ABC, if you know what I mean...

Here's a paragraph from Disney's Robert A. Iger Executive Biography:

Mr. Iger began his career at ABC in 1974. Over the last 32 years, Mr. Iger has held a series of increasingly responsible senior management positions at the company, including serving as President and Chief Operating Officer of Capital Cities/ABC, where he guided the complex merger of ABC with The Walt Disney Company. ABC saw tremendous growth during Iger's career there, becoming a market leader in broadcast television and expanding into numerous cable and related ventures. During Mr. Iger's years with ABC, he oversaw its broadcast television network and stations, radio, publishing and cable television businesses, which includes the market leading brands of ABC, ESPN, Lifetime, A&E and The History Channel. He officially joined the Disney senior management team in 1996 as Chairman of the Disney-owned ABC Group and in 1999, was given the additional responsibility of President, Walt Disney International.​

In other words, when The Walt Disney Company acquired ABC, they also "acquired" Bob Iger as part of the deal.

So far, I'm still optimistic about Bob Iger. Although his roots are in ABC, I think he's a smart guy — but not a guy who thinks he's smarter than everyone else. Iger seems to be willing to listen to others and to delegate authority. Last year, Iger was still working under Eisner's budget and dealing with projects that had been approved during the final Eisner year (during which, of course, Iger was a part the senior management team). Disney is now in a new fiscal year, and we should start seeing the results of Iger's post-Eisner initiatives.

 

[Another Voice]

Actually, Iger has been in effective control for more than two years now. As part of the deal worked out with Roy Disney, Eisner was pretty much of a figurehead during his last 12-18 months at the company. The real power was shifted to Iger - he's just not the kind of person that will make any rapid changes no matter the circumstances.

It is very telling, however, that he has spent his entire professional life at ABC, yet the network continues to struggle year after year. As of Wednesday, they lost another ratings sweeps period (to CBS again) and also showed a decline in veiwers from the previous November. What's also very interesting is that ABC only did as well as they did because of 'Dancing With the Stars' and two shows that Iger bitterly opposed putting on in the forst place ('Lost' and 'Desperate Housewives').

In the time since he's become high profile, all of his "big moves" have been corporate-focused: he wants to release DVDs the same day the movie is released to the theater (for which Disney has been receiving the wrath of the theater owners); he's put episodes of ABC shows on the Internet and iTunes; he through an awful lot of money at Pixar because Wall Street told him too (and now they're telling Iger that he overpaid).

None of these moves are work to increase Disney's creativity or innoviation - all he's doing is trying to stuff ABC down more pipes than just broadcasting and cable television.

If this man can't run the company he's grown up in - how can he run one so vastly different as theme parks. He is not well respected inside the company; he's not a man of vision or accomplishment.

 

[raidermatt]

So far, I'm still optimistic about Bob Iger.

I think it depends what you want.

I think he's made some tactical improvements. Pushing the issue with distribution, delegating more authority, etc. And he appears to have learned his lesson over Millionaire, painful as that lesson was for the company.

But strategically, nothing appears to have changed. There is nothing to suggest that there has been any kind of significant change in the way the parks/resorts are treated. We might not see the pitiful creative lows we saw at times under Eisner, but that's hardly what we can call significant change. Iger's policy is marketing over investment. He's told us so. And apparently, a lot of the investment that will take place is earmarked for the building of DVC resorts and shopping complexes.

Animation is harder to get a handle on, as it takes years for a movie to get from the storyboards to the screen. But it still seems there is significant resistance on the Disney side to accept the authority of Lasseter and the Pixar side. We'll see I guess.

 

[Mecha Figment]

to be honest. I like eisner better. at least Eisner had some creativity under his belt. I personaly think they need to go back to the two CEO model when with Frank wells and Eisner. it worked well and they balanced each other out.