Buffett Takes Disney Stock in ABC Sale
In a vote of confidence for the newly merged company, multibillionaire investor Warren Buffett said Thursday that he wants only shares of Walt Disney Co. in exchange for his investment company’s $2.5-billion stake in Capital Cities/ABC Inc.
Disney is buying Capital Cities/ABC for $19 billion in cash and stock, but gave shareholders some latitude on how they would be paid. Thursday was the deadline for making the choice.
Buffett is seen as one of the world’s savviest investors, and his selection is being closely watched as an indicator of his faith in Disney with Cap Cities under its wing.
He controlled 20 million shares, or 13%, of Cap Cities stock through his Omaha-based investment company, Berkshire Hathaway Inc.
If Buffett asked for all cash for Berkshire’s stake, that might have signaled doubts about the prospects for the huge media-entertainment conglomerate. An all-stock selection is seen as an indication that he sees the value of the investment growing under Disney’s management, analysts said.
“It shows a high degree of confidence in the management of Disney and its growth prospects in a variety of areas,” said John Reidy, media analyst for Smith Barney.
In a separate statement, Disney said a substantial majority of Capital Cities shareholders had elected to take either all stock or the standard selection of a share in Disney stock and $65 in cash for each Cap Cities share.
Since Disney set limits on how much stock it would issue in the deal, those requesting all stock, including Buffett, will get only a prorated share of the available Disney stock and get the rest in cash.
The final figures are not expected to be determined until next week when all of the selections are tallied.
“We are pleased to welcome Warren Buffett and the vast majority of Cap Cities/ABC shareholders into the Disney family of shareholders,” Disney’s chairman and chief executive, Michael Eisner, said in a statement.
The announcement came after the close of trading on the New York Stock Exchange, where Disney rose 37.5 cents to finish at $66.875.
