On the face of it, it looks like part of the Disney clan is abandoning the ship. Roy Disney, the nephew of the late Walt Disney, has sold 43% of his family’s holdings in the Walt Disney Co. to Credit Suisse First Boston. A closer look at the deal shows that might not be the case, at least in the long run.
In a complex deal known as a “forward transaction,” the sale allows Disney to retain the voting rights associated with the shares for five years while realizing cash flow from the sale. And there’s also an option for Disney to reclaim the shares at a later date for an agreed upon cash price.
In a statement released by his company, Shamrock Holdings, Roy Disney said he “wanted to emphasize his continued dedication to the company.” The Roy Disney trust is reportedly the 17th largest shareholder of the company and the largest non-institutional shareholder. However, the Shamrock’s holdings still represent less than 1% of the corporation’s total outstanding shares.
Since the Walt Disney Co. stock split 2-for-1 a couple of years ago, the share price has been buffeted and depressed by a lackluster company-wide performance. The dollar value of the Shamrock sale is put at $163 million. The trust will still have more than 10 million shares in the company. “A transaction of this type by someone in Roy’s position has become increasingly common,” the Shamrock Holdings statement said.