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Bid claim faces regulator and more scepticism

Friday, 1st December 2006 at 20:13

The regulator of the Euronext Paris stock exchange, Autorité des Marchés Financiers (AMF), has announced it will be opening an inquiry into the claim on Wednesday from mysterious Swiss firm Center-Tainment that it is preparing a hostile takeover bid for Euro Disney SCA. The claim has been met with growing disbelief and scepticism over the past 24 hours.,

The business world doesn’t hold much room for humour, so a story like this must come a real treat. A totally unknown company (Center-Tainment) with a current market capitalisation (number of shares multiplied by value) of €35m announcing a vague and boisterous intent to launch a hostile takeover of a vast company (Euro Disney) holding €272m – a company which also comes saddled with over €1.6bn of debt and an incomprehensible management structure intertwined with that of The Walt Disney Company?

Regulator AMF has now requested Center-Tainment to either make a formal bid by this Monday, December 4th, or refrain from any attempt to take over the company for at least six months.

The story has spread further over the past 24 hours, usually teamed with a headline based around a “mickey mouse bid” (such as the original Reuters article we featured yesterday), and has also finally made it to the business pages of UK newspapers. The Guardian‘s report can be found online here, whilst a look at The Daily Telegraph sees it awarded with the Business section front page and a large photo of Le Château de la Belle au Bois Dormant.

The brief report gives an interesting write-up of Center-Tainment’s intentions, explaining: “Mr Werner said Center-Tainment had been formed expressly to buy at least 50pc of Euro Disney shares. After reaching that level, it would replace the theme park’s management, terminate the operating contract with Disney and run the park itself, he said. However he refused to reveal his proposed management team or his financial backers.”

It seems that, should their planned bid miraculously be accepted by all the required parties, Center-Tainment would seek to run the resort with a structure similar to that of Tokyo Disney Resort‘s Oriental Land Company parent. Euro Disney would become almost entirely separated from The Walt Disney Company, paying only for the license to use Disney’s characters, brands and services (such as Imagineering, technical support), with greater independance (and profit) then likely expected by Center-Tainment.

After inaugerating Tokyo Disney Resort with it’s Oriental Land Company parent, The Walt Disney Company became unhappy with subsequently being left out of its huge financial profits and success, and therefore designed the Euro Disney SCA structure to (it hoped at the time) benefit its finances as much as French law would allow.

Ultimately, The Walt Disney Company would have a final say in any takeover bid, and, with watchdog AMF now closely watching proceedings, should the mysterious Center-Tainment step up to the podium and actually make a bid, they’re sure to hit more than a fair few stumbling blocks before they could take the throne of Sleeping Beauty Castle.

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