Disney CEO Talks M&A, and Snap Shares Surge – TheTradersWire

Disney CEO Talks M&A, and Snap Shares Surge


Disney CEO Talks M&A, and Snap Shares Surge

By Donna Fuscaldo | Updated September 10, 2017 — 2:04 PM EDT

The Walt Disney Co. (DIS) is talking mergers and acquisitions, which had the effect of boosting shares of Snap Inc. (SNAP), the beleaguered social media company.

During the Bank of America Merrill Lynch Media Communications Conference in New York this week, Disney Chief Executive Bob Iger told investors and analysts that its recent M&A activity will continue as the company aims to enhance its digital presence and take on the competition, which increasingly includes the likes of Facebook Inc. (FB) and Alphabet Inc.’s (GOOG) Google. Those comments sparked speculation with some investors betting one of the targets will be the maker of the disappearing-message app Snapchat, reported Markets Insider. Shares of Snap ended Thursday’s trading session up 10% and was recently trading an additional 2.4% higher to $15.52. The stock is still under its initial public offering price of $17 a share from back in March. (See also: Snap Founders Lose Net Worth on Stock Decline.)

For months now, some on Wall Street have been calling on the Burbank, Calif.-based entertainment company to engage in some game-changing buys. In May, longtime Disney analyst Richard Greenfield argued management at the company should be using its strong balance sheet and free cash flow to “strategically reposition” it for future growth. In order to do that, he thinks the company should stop repurchasing shares and instead use the money for acquisitions. “Buying back stock appears to be a very short-term decision that shows management’s lack of urgency to reposition Disney,” wrote BTIG media and tech analyst Greenfield at the time. (See also: Disney Should Buy Twitter or Spotify: BTIG)

Wither Twitter?

“Given the strength of Disney’s earnings and free cash flow, especially if buybacks​ stopped, we believe they have tremendous firepower to make a series of acquisitions over the coming 12-24 months.” Back then, the analyst pointed to micro blogging website operator Twitter Inc. (TWTR) as a target. Snap and Twitter share similar characteristics that could make the latter attractive to Disney. Both have stocks that are under pressure, with Snap at historic lows, and while they aren’t making money, they have huge user bases that Disney can tap to offer them a suite of products, services and content.

And it’s not like others haven’t been interested in the maker of Snapchat. In August, Business Insider reported that Google bid at least $30 billion in 2016 for the company. The offer, which was rejected by Snap, remained on the table after it went public. It’s not clear if Google is still interested in acquiring the company. Facebook also made an offer for Snap a few years ago, and that, too, was rejected. (See also: Snap Turned Down a $30B Offer From Google: Report.)


Published at Sun, 10 Sep 2017 18:04:00 +0000

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