CBS stock buyback could set stage for buyout by Disney.CBS (Cell Broadcast Service) See cell broadcast. stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. could set stage for buyout by Disney An offer from CBS Inc. last week to spend $2 billion buying back 44 percent of its outstanding stock fueled speculation on Wall Street that the troubled broadcast company is positioning itself for a takeover - with Walt Disney Noun 1. Walt Disney - United States film maker who pioneered animated cartoons and created such characters as Mickey Mouse and Donald Duck; founded Disneyland (1901-1966) Disney, Walter Elias Disney Co. of Burbank as the odds-on favorite. "It makes it easier for the company to be bought up," analyst Alan Gould Alan Gould (born 22 March 1949) is a contemporary Australian novelist and poet. Born in London Alan Gould's family lived in Northern Ireland, Germany and Singapore before arriving in Australia in 1966. , of Dean Witter Reynolds Dean Witter Reynolds was an American stock brokerage catering to the middle class. In 1997, it merged with the Morgan Stanley Group to form Morgan Stanley Dean Witter. The amalgamated firm is now known as Morgan Stanley. , said of the CBS stock buyback. Analyst Paul Marsh of Bateman Eichler, Hill Richards said CBS, by offering on Dec. 12 to pay $190 per share for stock that closed at $169 the day before, may have been setting a floor price below which acquisition offers would not be considered. "It (CBS) is saying to its suitor SUITOR. One who is a party to a suit or action in court. One who is a party to an action. In its ancient sense, suitor meant one Who was bound to attend the county court, also, one who formed part of the secta. (q.v.) , `You're not going to get me for a cheap price,'" said Marsh. CBS stock rose $5.625 the day of the buyback announcement, then bounced up and down the following day, hitting a high of $179 on Dec. 13 to close at $175, off 50 cents for the day. Disney stock rose $2.50 on Dec. 12 and $1.375 on Dec. 13, to close at $104.875. Asked if he thought the rise in Disney stock prices was connected with the CBS buyback, analyst Gould said: "It's got to be to some degree." Disney has been rumored to be a potential CBS buyer all year, but the stock buyback, combined with recent cost cutting moves at the company, makes CBS a leaner and more affordable target. CBS recently "has been implementing reductions in personnel levels," according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a company statement, including the closure of news bureaus in Chicago and Denver this month. Sources said several CBS employees in Los Angeles were laid off last week, but the company denied the reports. One inside source said the people who lost their jobs may have been notified a month before and therefore were considered the victims of earlier cost trimming. The securities firm of Smith Barney, Harris Upham and Co. estimated that after the 44 percent buyback, remaining CBS shares would not sell for "much below $170 . . . because of the high per-share asset value and possibility of future transactions." A Disney takeover would depend upon a Federal Communications Commission Federal Communications Commission (FCC), independent executive agency of the U.S. government established in 1934 to regulate interstate and foreign communications in the public interest. decision reversing rules that prohibit a network from having a financial interest in the production or distribution of television programs. An FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. decision on the rules is expected early in 1991. "After that, the question is: `Are there benefits?' There's no question Disney has sufficient cash," said analyst Christopher Dixon of Kidder Peabody & Co. Dixon agreed the CBS stock buyback was setting a floor price for acquisition, but he said he didn't believe that was the main purpose for the move. He noted that it was prompted in part by a decision by the trustees of the William S. Paley
William S. Paley (September 28, 1901 in Chicago, Illinois – October 26, 1990 in New York, New York) was the chief executive who built CBS from a small estate to tender the estate's 1.3 million shares of CBS stock. The CBS buyback offer for 10.5 million shares was scheduled to begin this week and expire on Jan. 21. The Loews Corp., controlled by CBS Chief Executive Officer Laurence A. Tisch, also is tendering its 5.8 million shares. Loews and the Paley estate will retain their stake in the company, owning 25 percent and 8 percent of the outstanding shares, respectively. The CBS board on Dec. 10 elected Tisch, 67, as chairman, replacing Paley, who died Oct. 26. The stock buyback will leave CBS with less than $1 billion in cash, just enough to cover its debts, effectively eliminating the possibility it will diversify. CBS is projecting a 1990 fourth quarter loss, due largely to a loss of $55 million from its coverage of Major League Baseball "MLB" and "Major Leagues" redirect here. For other uses, see MLB (disambiguation) and Major Leagues (disambiguation). Major League Baseball (MLB) is the highest level of play in North American professional baseball. , and announced a write-off of $115 million in projected future baseball losses. Because of the inflated stock price in the buyback, the $1.10 quarterly dividend rate on CBS common stock will fall an unspecified amount, CBS said. PHOTO : Walt Disney Co. headquarters in Burbank: Company executives would not comment |
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