What is Duffy going to do with his Disneyland Paris shares?


If you are a Disneyland Paris shareholder you will have been informed by now  that The Walt Disney Company has launched a Cash Tender Offer for Euro Disney S.C.A.

The Walt Disney Company is offering Disneyland Paris shareholders €2.00 a share if they agree to sell their Euro Disney shares to them.

Once the Offer is completed and if TWDC reach a share ownership threshold of  95% they then plan on launching a mandatory buy-out of Euro Disney to take full control of the company and delist Disneyland Paris from the Euronext Paris stock exchange.

This is of course if the French Government and AMF allow them to do so.

Today I’m joined by  my travelling companion and fellow Disneyland Paris shareholder Duffy,  who like many other shareholders  has some questions about the Simplified Cash Tender Offer.

Duffy:  I’ve received an e-mail from my stock broker about The Walt Disney Company wanting to buy my Euro Disney shares.

Me too Duffy, what have you decided to do?

Duffy:  I’m undecided, I like owing a small part of the ‘Magic’.

Yeah I know,  it is all very complicated and quite a hard decision to make isn’t it.

Duffy: Yes it is…  The e-mail said I had to let them know my decision by 29 May.

Me too.

Duffy: If I sell my shares will I still be a member of the shareholders club?

Yes you will Duffy.  The Shareholders Club made an announcement  in April advising that all active members of the Shareholders Club as of 31 March 2017, will benefit from a 10-year extension of their membership card and associated discounts no matter what happens.

Duffy:  Do you think €2.00 a share is a good offer?

That is a hard one to answer.  Before the Offer was announced the share price was around the €1.20 mark.  In real terms due to the losses and the depreciation of Euro Disney’s assets last year an independent expert has valued the share price value to be €0.60 a share.

The French hedge fund CIAM on the other hand argues that The Walt Disney Company should be offering shareholders €3.70 a share.

Duffy:  So if I sell my shares to The Walt Disney Company I will receive €2.00 for each share.

Yes Duffy that is correct, and Disney will refund your brokerage  fees up to the sum of €100 in some circumstances.

Duffy: What happens if I don’t sell my shares

Well Duffy you will still own them, but there are risks.  If you don’t sell during the Offer using the Centralised Procedure you may loose out.

For example if The Walt Disney Company makes a bulk trade agreement with a large shareholder and they agree to buy their shares at a price of  €2.25 you would also benefit in the increased offer price and receive the same amount per share.

Duffy:  Could there be another recapitalisation and devaluation of the shares like last time if the takeover fails?

If the takeover fails, there will be another recapitalisation and another possible devaluation of the share price.  A new share price of €0.60 has been rumoured if another recapitalisation takes place.

Duffy:  And would I be expected to re-invest again?

Yes you would Duffy.  They would need to raise €1.5 billion to held reduce the resorts debt and like the previous recapitalisation TWDC will offer to buy your shares off you.  Last time the shares were devalued from £3.46 to £1.25.  This time it is the rumoured they will be devalued to  €0.60.    Which is quite a difference to the  €2.00 they are offering now.

Duffy:  Do you think a takeover of the resort is in the parks best interest.

Well the €1.5 billion TWDC has pledged to Disneyland Paris will help reduce the resorts debt and increase their liquidity.  And with TWDC in charge of the resort I hope they will be able to improve the guest experience.

But I expect prices will increase even further as TWDC tries to reduce operating costs and in an attempt to try and make the resort break-even or even profitable.

Duffy:  Will they start building  new rides the day TWDC takes over?

No Duffy, TWDC has said they will continue with the resorts present 10 year plan, which sees the refurbishment of Hotel New York with a Marvel theme and the rehabilitation of the Disneyland Hotel.  There will also be a new Marvel-themed show in the Walt Disney Studios Park.

Duffy:  What are you going to do?

I have decided to sell all but one of my shares.

Duffy:  Why all but one?

If the takeover fails and the AFM refuses to allow TWDC to takeover Disneyland Paris, I will still have one share in the company.  This will enable me to be allowed to attend future Annual Shareholder Meetings.

How many shares do you own Duffy?

Duffy:  I own 5 shares

So your set to receive a windfall of €10.00 if you sell up to TWDC.

Duffy:  Yes €10.00 which is about £8.60 now.

Just enough to buy a pint of Kronenbourg 1664 on your next trip.

Duffy:  Do you think TWDC will invest in the Walt Disney Studios Park?

I do hope so Duffy,  but not for at least another 10 years I expect.

So what are you going to do with your shares Duffy,  have you decided?

Duffy:  Yes –  I’m going to sell my Euro Disney shares to TWDC.

Then I’m going to use the money to invest in a company that is launching a range of chocolate teapots.

That sounds like a very wise investment choice Duffy……..

Duffy: When TWDC take over will people still use selfie sticks in the parks?

I think they will Duffy….

Duffy:  And smoke in the parks too?

Let’s not go there………