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Euro Disney targeted for hostile takeover?

Wednesday, 29th November 2006 at 17:18

There are reports spreading across Reuters and the various business networks that Euro Disney SCA, the heavily indebted operating group of Disneyland Resort Paris, is about to be targeted by Swiss group Center-Tainment for a hostile takeover bid.,

French daily Le Monde said that Euro Disney officials have not been contacted by Center-Tainment, but acknowledged that the group is aware of the email sent to the newspaper, apparently in error, reporting the launch of a bid tomorrow.

PARIS, Nov 29 (Reuters) – French theme park operator Euro Disney is aware of a report that it was about to receive a hostile takeover bid but said it had not been approached, amid reports of a pending offer by a little-known Swiss firm.
“We are aware of the rumour that this company is organising a press conference in Paris tomorrow to present a bid, but we can’t say more. We have not been approached,” said a spokesman for Euro Disney on Wednesday .

He was responding to an article in Le Monde newspaper which said Zug, Switzerland-based and Frankfurt-listed Center-Tainment AG was poised to make a bid for the operator of Disneyland Paris.

Center-Tainment said last week it would hold a news conference on Nov. 30 to announce an unspecified takeover. Center-Tainment did not immediately respond to an e-mail seeking comment on Wednesday.

Heavily indebted Euro Disney is 39.8 percent owned by Walt Disney Co. via its 100 percent subsidiary EDL Holding, and 10 percent indirectly owned by Saudi prince Alwaleed. The loss-making company’s banks have a large say in its future, however, through conditions they have set in return for providing the firm with debt financing.

Euro Disney has a market capitalisation of 272.84 million euros, with its net debt of 1.67 billion euros at Sept. 30 giving an enterprise value close to 2 billion euros. Its shares trade at 7 euro cents after a 36 percent decline this year and a 54 percent fall over 2005.

Center-Tainment chairman Ulf Werner said in a statement last week that the target company was itself listed and therefore resistance by management and some shareholders could be expected. Werner said that movements in the Center-Tainment share price gave rise to suspicion that some parties had taken short positions to make a Center-Tainment bid less attractive.

“The target company has, as is proper procedure, already been informed about Center-Tainment’s strategy,” the firm said, adding the target firm’s investment bank had contacted the company and was preparing a defence.

Center-Tainment said that it expected a risk-free gain in double-digit millions if its five-year plan for the target firm was executed and it said it was confident it could finalise the acquisition in 2006. Center-Tainment is a holding company of family entertainment firms that are active in outdoor and indoor activities. Its Web site lists Jack Kaeser and Hermann Wattenhofer as other executives.

At the start of November, Euro Disney said a new Buzz Lightyear ride helped it boost visitor numbers and trim its fiscal 2006 year loss and it was confident it could keep afloat in 2007. The company, which has to meet certain financial targets to stop banks from calling in its debts, said its net loss narrowed to 73.1 million euros from a comparable loss of 92 million euros in 2005.

The operating loss excluding debt-servicing costs narrowed to 2.4 million euros from 31.9 million as revenues grew faster than costs. It said it planned a series of special events around its 15th anniversary and new additions to its Walt Disney Studios Park.

News from Reuters.
What a takeover from this group would mean for Euro Disney is uncertain. Forbes reports shareholders would be offered Center-Tainment shares, but quite how a takeover of a company so heavily in debt and so dispersed (there are more separate operating and holding companies within the group than you could ever imagine) could happen hasn’t yet been answered. The changes would, we can presume, be on the business and ownership side of things only.

The Swiss group has apparently organised a press conference in Paris, whilst Euro Disney are still in the dark, out at Marne-la-Vallée. It seems we’ll have to wait until tomorrow to see if truth lies within this story.

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