One day after Walt Disney Co. rejected Comcast Corp.'s unsolicited takeover offer, both companies' investors appeared to be following the leads of their respective managements -- and digging in for a potentially long battle.
Disney's shares dipped as low as $26.49 on Tuesday, then rallied to close off slightly, down 2 cents to $26.90 on the New York Stock Exchange. The stock's resilience, in continued heavy trading, suggested that many on Wall Street believed the company was worth at least its current price, with or without a suitor.
Sources close to the Comcast camp said they might have misjudged investors' sentiment toward Disney, as the stock has held well above the value of Comcast's week-old offer.
But there was positive news for Comcast Chief Executive Brian L. Roberts as well: Comcast shares rose for the first time in four trading sessions, gaining 85 cents to $30.75 on Nasdaq.
Comcast's insistence that its $50-billion stock-swap offer for Disney is generous -- and that it won't raise the bid -- heartened many of its investors who have been fearful that the cable giant might overspend for Disney.
"I'm impressed with the fact that they're not going to negotiate against themselves," said Morris Mark, head of Mark Asset Management in New York and a supporter of the bid.
Still, many investors on both sides believe Comcast eventually will raise its offer modestly, most likely by adding a cash component to sweeten the pot.
For the moment, the day-to-day action in the stocks is likely to be the main focus of both the Comcast and Disney camps, because the market's judgment is crucial in determining which side gains the advantage.
Disney arguably has the edge for now: Although Comcast's stock rose Tuesday, the value of its offer -- 0.78 share for each Disney share -- was worth $23.99 a share to Disney holders.
That was 10.8% below the media titan's closing stock price.
The gap between the market's assessment of Disney's worth and the value of the Comcast offer was specifically cited by Disney's board Monday in its statement rejecting the bid.
Comcast countered that its bid reflected "a full and generous valuation based on Disney's prospects and performance over a long period of time." Disney had been trading at less than $25 for most of the last three years. Before Comcast stock fell last week, its bid was worth about $26.50 per Disney share.
The Comcast camp remained adamant that it wouldn't boost its offer.
