Financier Irwin L. Jacobs ended his long-standing challenge to the management of Walt Disney Productions yesterday by selling his 7.7 percent stake in the company for $159 million to Disney's largest shareholders, the Bass family.
With the purchase of Jacobs' stock, the Basses now own just under 25 percent of the Disney entertainment empire, having tripled their holdings in the past three days.
The Basses, a group of Texans reported to be worth billions, are Disney's largest shareholder, but they say they will not buy any more stock and have no interest in running the company. Their holdings give them veto power over any future attempts to take control of the company, since Disney's corporate charter requires that any change in control must be approved by holders of 80 percent of the company's stock.
The capitulation of Jacobs appeared to end a long-running corporate drama at Disney, whose output usually runs toward lighter fare such as Mickey Mouse and Donald Duck.
The roller-coaster of events surrounding the company rivaled any thrill ride at Disney World. Over the past several months, Disney has withstood takeover threats, management infighting, the ouster of its chief executive and rebellion by Disney family members. Speculation that the tumult would end in a takeover of the company has kept Disney's stock at a high price, but yesterday, with analysts saying the Bass purchase of Jacobs' interest all but ends any buyout possibilities, the company's stock fell $4.125 to $55.125 in active trading.
Much of the stock-market activity centered on a single block of stock, the 2.6 million shares a group led by Jacobs has been holding since early summer. The Basses purchased the block for $61 a share, roughly $10 per share more than the Jacobs group paid for it, earning Jacobs a $26 million profit on the investment. On Tuesday, the Basses bought 2.5 million shares for $60 each to double their previous holdings.
Jacobs had been threatening a stockholder battle for control of the company, but many analysts believed he was bluffing in hopes of provoking a takeover of Disney that would give him a hefty premium for his stock, or, failing that, cause Disney to purchase his stock to get rid of him. Earlier this year, Disney bought out investor Saul Steinberg, who had similarly threatened to challenge the control of the company.
Jacobs could not be reached for comment yesterday.
Disney officials apparently fear no challenges from the Bass family. "We are extremely pleased to have such enormously supportive investors owning such a large portion of the company," Disney Chairman Michael D. Eisner said in a statement. "They are exactly the kind of investors that this company needs."
In a rare public statement by one of the reclusive Basses, Sid Bass, the oldest of five brothers who with their father hold the family fortune, said, "This acquisition on our part represents a total commitment to the new management of Walt Disney Productions and to the long-term development of the assets of the company in the best interests of all the shareholders. We have told Michael Eisner and Disney President Frank Wells that we intend to buy no additional shares, and that we have no interest in participating in the day-to-day operations of the company."
It was not immediately known whether the Basses would ask for additional seats on Disney's board, where they already have one representative. Despite their pledge to stay out of daily management of the company, the Basses have played an increasingly large role in making fundamental decisions at Disney. They became shareholders earlier this year when Disney, in a move to fend off Steinberg, gave them slightly more than 5 percent of the company's stock in exchange for their share of Arvida Corp., a Florida land development company purchased by Disney.
The Basses reportedly were instrumental in the scuttling of a proposed acquisition by Disney of Gibson Greeting Co., which had been proposed by then-president Ron Miller. The Basses then had a hand in the ouster of Miller -- Walt Disney's son-in-law -- and the selection last month of Eisner and Wells, two longtime Hollywood executives, as the company's top managers. Jacobs also favored Eisner and Wells, who are expected to move Disney away from the family-type films it has specialized in and into more sophisticated material. Yesterday, the Disney's movie operation announced its first new project under the new management, a film by writer-director Paul Mazursky.