This word is getting thrown around everywhere, both in the financial press and here at mouseplanet. This is not my area of expertise and I'd be interested in hearing from someone who really knows this, but my understanding of a hostile takeover is one in which current management and the board are opposed to the takeover.

Comcast has not talked to the board, nor has it been rebuffed by anyone but Eisner. Indeed, the offer was made to prompt discussion with the board, something that happened quickly.

Is this really a "hostile takeover" in the traditional sense?

If you haven't read it yet, Alex Stroup wrote an article (http://www.mouseplanet.com/dan/bm040212as.htm) that's on the front page of Mouseplanet today that discussed what a hostile takeover is and what the initial Comcast proposal means. I found it very interesting, since I don't tend to follow this type of news very closely.

Originally posted by genenpet
Is this really a "hostile takeover" in the traditional sense? It's not...yet. Like Steph said, go read Alex's article. It has a good explanation of what is going on (in plain English).

In part II I will address just this question.

Last night I got so caught up in defining what a "hostile takeover" is, that I forgot to answer the more fundamental question of "is this a hostile takeover?".

The quick answer is, "no, not yet." However, by going public with and offer, the implication is that Comcast will go down that road if necessary.

What we have right now is essentially an "unsolicited offer."

Comcast attempted to make an offer directly to the board but was not given the option to do so. So they made it publicly. The Board of Directors has a fiduciary responsibility to consider all offers and made a decision based on what is best for shareholders.

The board will cosider the offer (and has already said they are doing so). If they are not inclined to accept, they will take as long as they can to deny it and then the gamesmanship begins. Comcast can make a new offer which will be considered, they can try to go directly to the shareholders, they can hope that the shareholders are intrigued and enpanel a more receptive board of directors.

One method of resisting takeovers is to have staggered board elections. But like the poison pill, Disney went from staggers elections to full slate elections a while ago. This will allow a shareholder revolt that could replace the entire board in one swoop. In staggered elections, this process would take several election cycles.

From m-w web site:

2b : adverse to the interests of a property owner or corporation management <a hostile takeover>