Multimedia said Monday that it had rejected a $1-billion takeover proposal and approved instead a sweetened buy-out bid from an investor group that includes its senior management and members of its founding families.
The Multimedia management bid, which includes cash and securities, was valued at about $53.20 a share, according to Multimedia President Walter Bartlett. With 16.7 million shares outstanding, that would make the offer worth about $890 million.
Bartlett said an independent group headed by former Treasury Secretary William E. Simon had proposed a buy-out of $60 a share, but only if the company agreed to sell its newspaper operations.
Bartlett said the company's management and founding families had decided "under no circumstances will we split up the company" and rejected the proposal.
He said that, when informed of the company's position, Simon "did not appear to be interested in any kind of unfriendly bid."
Four Calls Placed
Four calls were placed to Simon's investment company, Wesray Inc. of Morristown, N.J., but Simon was said to be in a meeting and not available for comment.
In trading Monday, Multimedia was unchanged at $53.875 a share in over-the-counter activity.
The Multimedia management buy-out proposal, which is subject to approval by the company's shareholders and regulatory clearance, calls for payment of $41.25 in cash and $26.54 principal amount of a new issue of debentures for each share of Multimedia common stock.
That was up from an earlier offer of $37 in cash and $25 principal amount of 15% debentures.
Bartlett said the original offer had been worth about $49.50 a share and the revised offer was worth about $53.20 a share.
The new plan would keep the company public, while the earlier proposal would have taken the company private.
Stockholders may elect to retain an interest in the company by taking half of a share of stock in the new company in lieu of $5.25 of the cash being offered by management.
Depended on Approval
Multimedia said it had received the $60-a-share proposal during the past week and that, in addition to sale of the company's newspaper operations, it would have depended on obtaining financing and approval of the founding families and management.
The revised offer that was approved by the board had been made by an investor group consisting of senior management and members of the Peace, Jolley, Sisk and Furman families, which founded Multimedia. It was approved by a special committee of independent directors.
Multimedia said the transaction will not be completed unless a majority of the shares not held by the investor group are voted for the plan. The group currently holds about 40% of the outstanding shares.
Bartlett said he hoped that the deal would be completed within three months.
But two private analysts said new offers could surface.
"I'm not sure it's all over yet," said Bruce Thorp, a newspaper industry analyst in Washington for the brokerage firm Lynch, Jones & Ryan. But he said the bid had "established a new floor price" for Multimedia.
Peter Appert, who follows media stocks for the investment firm Cyrus J. Lawrence Inc. in New York, said he was advising his clients to "hang in there for a few more days" to see what develops.
Multimedia is a communications company that publishes 13 daily and 30 non-daily newspapers, owns and operates five television and 12 radio stations, operates more than 100 cable-television franchises in four states and produces and syndicates television programming, including "The Phil Donahue Show."