Could These Cats Pounce On Mickey?

The usual thinking on the Street is that entertainment colossus Walt Disney is on the prowl for a trophy--a major TV network, say. But what if some party were stalking Disney itself and buying up its shares--to unseat the admittedly well-entrenched Michael Eisner management?

That's exactly what's going on, say several traders and big Disney investors, who whisper that a group led by a Middle Easterner has accumulated more than 5% of the stock. Since early November, trading has been heavy, pushing the shares up from 38 to nearly 44. No 13D form has been filed, however, since the investors have broken up the buying into several overseas groups, so that no one party appears to hold 5%.

"But make no mistake about one thing," says a major Street trader. This Mideast group, which has acquired real estate holdings and large stakes in a number of banks, department stores, and hotels in the U.S., "has been buying Disney shares like the stock was in a fire sale." This secretive group, which includes high-profile and deep-pocketed American buyout investors, is aiming to gain at least 10% of Disney's 536 million shares outstanding and then make "some kind of an announcement" about their interest and stake in the company.

The ultimate goal, says one investor who subscribes to this story, is to take control of Disney and oust Eisner. Lately, the chairman has been catching flak for the huge income he has drawn in recent years. He also has been blamed for the EuroDisney fiasco and for the unexciting performance of Disney's stock this year.

Disney has repurchased about 1.4 million shares at an average price of 411/2 in recent months. The buybacks may accelerate if the Mideast group's activity continues. Management owns little stock. On Nov. 22, the company posted fiscal 1994 earnings of $2.04 a share--slightly more than the Street's mean estimate of $2.01--and well above $1.23 in 1993. Revenues rose to $10.1 billion, up from $8.5 billion. The results reassured investors who had worried about rumors earlier in November that Disney's 1994 revenues and earnings growth may have slowed.

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