214 InManagersWeTrust
Contrast Mattel’s story with the policies of Disney. Disney’s
philosophy is to make only acquisitions that are in a related or
complementary field that current management understands fully,
and at a fair price. In its most important acquisition, Capital Cities
ABC fit the bill. Disney’s long-time chairman, Michael Eisner, had
worked at ABC from 1966 through 1976 and had seen it grow from
a networ kcritics called the “fourth of three” to first place in every
category.
After Capital Cities bought ABC in 1986, Tom Murphy and Dan
Burke catapulted it to yet new heights, and the combination with
Disney made sense. Walt Disney himself liked ABC as well. After
all, ABC helped finance Disneyland in 1955, and Walt brought ABC
to Hollywood when he began what is nowThe Wonderful World of
Disney. Disney’s Internet business benefited enormously from the
addition of ABC.com, ESPN.com, and a host of cable assets that
enable important growth opportunities.
Defensive
Takeover defenses are the flip side of offensive acquisition strategies.
Antitakeover devices such as the poison pill protect management’s
decision making by discouraging attempts to acquire the corporation
or remove incumbent directors (as AMP’s defense against Allied-
Signal attests). If some or a majority of stockholders deem a takeover
attempt to be in the corporation’s and their best interest and the
potential acquirer is willing to pay a premium over the prevailing
market price or intrinsic value of the corporation’s common stock,
antitakeover devices work against shareholders.
Disney’s acquisition philosophy is also illustrative on this side of
the table. Corporate raiders of the early 1980s sought to acquire
Disney and bust it up but Roy Disney would not let that happen.
He preserved Disney as a great American institution and facilitated
a recommitment to the fundamental businesses that had made it
great. Disney animation, for example, with Roy at the helm, rein-
vented itself and surged with a long series of critically and popularly
acclaimed films. In doing so, Disney adopted the best takeover de-
fense strategy there is: an extraordinary business. (More on Disney
in the next chapter.)
To be sure, situations exist in which hostile offers are inadequate
and not in the interests of the corporation or any of its constituents.
Yet incumbent managers facing unwanted takeover talks naturally