Capital Cities Merger
Disney's announcement of its acquisition of Capital Cities/ABC in August 1995 for a consideration of $19.6 billion; was then the 2nd largest acquisition in history and created the world's largest media conglomerate with assets of $30 billion and market capitalisation of $50 billion.
The Walt Disney Company, the creator of Mickey Mouse and other related characters was started in 1923 by Walter Elias Disney and his brother Roy. The company released the first ever full length animated feature film Snow White and the Seven Dwarfs in 1937 and is now the world wide leader in feature animations. Today the company has investments in cartoons, animated films, theme parks, television stations, movie studios, record labels, and sports clubs.
At …show more content…
The merger resulted in Capital Cities becoming a fully owned subsidiary of the Walt Disney Company. Disney did not make any major changes to Capital Cities' management team. Robert Iger was retained as the President of ABC while Thomas Murphy relinquished his post as chairman of Capital Cities to become a director in the Walt Disney Company.
Disney underwent some internal re-structuring and re-alignment in order to optimally group its extensive holdings. This re-structuring resulted in all cable channels ABC management. Disney's Buena Vista T.V. and its offshore TV affiliations as well as Disney T.V. International were also grouped under the newly renamed ABC, Inc. While all video and interactive operations including those of ABC were now being run by Disney Home Video and Interactive and Online groups. The newspaper divisions of the company were sold off between 1997 and 1998 and most of the proceeds from the sale invested in the Internet and other newly developed distribution …show more content…
This deal led to additional debt of $9 billion for Disney which reduced the company's excess cash flows and was to stimulate internal change to increase efficiency. The takeover was financed by a mixture of stock and debt; Disney shares reached an all time high in the mid 90s and management must have believed that the shares were overpriced.
The takeover did not involve any counter-bidding. The market showed its approval of the deal with an initial jump of 4 ¼ points in Disney's shares to 62 7/8 and a rise of 19 points to 115 1/8 for Capital Cities stock. Disney's shares eventually settled at 58 1/8 a boost of 1 ¼ points. At the time of the deal both the acquiring shareholders (Disney) and the target shareholders (ABC) realised gains; although the lion share went to Capital Cities/ABC's shareholders.
Initially, the Disney/ABC merger failed to realise the much flouted gains of the merger and the company experienced a decline in net margins from $1.9 billion in 1997 to $1.3 billion in 1999. Disney's poor performance in the years after the merger led to a battle between the shareholders and the management of the company; which opened up the company to a hostile takeover by Comcast in 2004 which was
The Walt Disney Company, the creator of Mickey Mouse and other related characters was started in 1923 by Walter Elias Disney and his brother Roy. The company released the first ever full length animated feature film Snow White and the Seven Dwarfs in 1937 and is now the world wide leader in feature animations. Today the company has investments in cartoons, animated films, theme parks, television stations, movie studios, record labels, and sports clubs.
At …show more content…
The merger resulted in Capital Cities becoming a fully owned subsidiary of the Walt Disney Company. Disney did not make any major changes to Capital Cities' management team. Robert Iger was retained as the President of ABC while Thomas Murphy relinquished his post as chairman of Capital Cities to become a director in the Walt Disney Company.
Disney underwent some internal re-structuring and re-alignment in order to optimally group its extensive holdings. This re-structuring resulted in all cable channels ABC management. Disney's Buena Vista T.V. and its offshore TV affiliations as well as Disney T.V. International were also grouped under the newly renamed ABC, Inc. While all video and interactive operations including those of ABC were now being run by Disney Home Video and Interactive and Online groups. The newspaper divisions of the company were sold off between 1997 and 1998 and most of the proceeds from the sale invested in the Internet and other newly developed distribution …show more content…
This deal led to additional debt of $9 billion for Disney which reduced the company's excess cash flows and was to stimulate internal change to increase efficiency. The takeover was financed by a mixture of stock and debt; Disney shares reached an all time high in the mid 90s and management must have believed that the shares were overpriced.
The takeover did not involve any counter-bidding. The market showed its approval of the deal with an initial jump of 4 ¼ points in Disney's shares to 62 7/8 and a rise of 19 points to 115 1/8 for Capital Cities stock. Disney's shares eventually settled at 58 1/8 a boost of 1 ¼ points. At the time of the deal both the acquiring shareholders (Disney) and the target shareholders (ABC) realised gains; although the lion share went to Capital Cities/ABC's shareholders.
Initially, the Disney/ABC merger failed to realise the much flouted gains of the merger and the company experienced a decline in net margins from $1.9 billion in 1997 to $1.3 billion in 1999. Disney's poor performance in the years after the merger led to a battle between the shareholders and the management of the company; which opened up the company to a hostile takeover by Comcast in 2004 which was