judy@ism780.UUCP (06/16/84)
#N:ism780:14000002:000:1384 ism780!judy Jun 14 16:26:00 1984 I have some questions about take overs. This is prompted by the recent experience Disney has had with Steinberg. I was asking my investment banker brother-in-law about his latest big deal and he pointed me to the newspaper on Saturday stating that Steinberg had bought out Disney. As you probably read, this didn't happen. Rather Disney paid him off to get him not to buy them out. And Steinberg made a huge profit at it. Apparently this is the sixth time he's done this. Now, to my innocent eyes it looks like Disney was in a position in which they had to pay someone not to screw them over. And this seems underhanded to me. Is it as unethical as it appears? Are there laws to stop it? And if not why not? I hate to realize that there are bullies in the adult world behaving no better than the neighborhood bullies we all hated as children. And I'm saddened even more to think my family is helping them. But before I get on a moral high horse to my brother-in-law (he's flamed at me a couple of times for matters far less important) I'd like to get a better picture of the transaction. The analogy I want to use is "How would you feel if someone took your son and made you pay x dollars not to ruin his life?" But since Disney is no longer privately owned but is a corporate entity this losses some potency as an example. But ethically it is the same type of thing.
newton2@ucbtopaz.UUCP (06/18/84)
The *management* of Disney paid Steinberg (and his cohorts) to disgorge the stock he had accumulated; the were protecting themselves, not the company, from Steinberg's takeover. They clearly weren't helping the (public) stockholders, whose share price plummeted from ~$70 (the price Steinberg was paid) to <$50 overnight. Had Steinberg not been paid (with shareholders' money) to back off, he may possibly have completed his takeover, to the obvious advantage (short term at least) of the shareholders whose stock spurted in price. Now the company is several hundred $M pooer in cash, Steinberg's group owns options to strip Disney of its undeveloped assets (lots of raw land etc.) and the stock price is in the proverbial toilet. I make no judgment regarding the ethics of Steinberg's group, but it seems clear that the only thing Disney's officers "saved" by their "defense" was their control of a company owned by others (the shareholders); in doing so they may have poisoned their own well. This sort of thing is pretty commonplace. Remember the Bill and Mary Show at what used to be Bendix?
crm@rti.UUCP (06/18/84)
There was an article on Public Radio "Morning Edition" (or whatever) in which this was called 'greenmail' (Cf. 'blackmail'). As well as being morally reprehensible on the part of this Sol whatsisname, the position of the Disney management is a little funny too. Seems that Sol ?? (for some reason I remember his first but not last name) told the Disney management that if he managed to purchase the company, he would toss them all out. So part of the response was to save their own jobs at the stockholders' expense (since they used Disney assets to buy back to stock from Sol-baby.) As usual, now that the horse has left the barn, Congress is trying to make it illegal. Ghod knows how long it will take, or what it will mean when they are done.
rlp@cbscc.UUCP (R L Platt) (06/20/84)
The same thing happened a few months ago with Warner Communications.
Rupert Murdoch bought up about 6% of Warner at ~$25 a share. Warner
management offered him $32 per share ($70 million) to leave them alone.
Warner stock is now at $22, and many stockholders are understandably
annoyed (ie. they're suing Warner).
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+----+ R. L. Platt
/| /| AT&T Bell Laboratories
+-|--+ | Columbus, Ohio
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|/ |/ nscs!rlp
+----+ (614) 860-4850tbul@trsvax.UUCP (06/21/84)
#R:ucbtopaz:-49800:trsvax:52900008:000:299
trsvax!tbul Jun 21 12:20:00 1984
Remember that nothing prevented people from selling their Disney shares at
~$70 on the open market...
"Find an aim in life before you run out of ammunition." - Arnold Glasow
allegra!convex!ctvax!trsvax!tbul Fort Worth, Texas
O O O Official Software Engineer of the 1984 Olympics
O O