Orion Pictures said Thursday that its largest investor group has agreed to sell its 27% stake for $26.3 million to a new group led by Viacom International. The action blocks two unsolicited bids for control of Orion that the New York-based movie company's management opposed.
The Viacom-led group, which includes the investment firms Wertheim & Co. and Bear, Stearns & Co., said it has agreed to buy 812,500 shares of common stock for $12 per share and warrants to purchase an additional 2.76 million shares for $6 a warrant from WP Films Associates, a limited partnership controlled by Warburg, Pincus Capital Corp.
Orion management rebuffed an offer last week from Anabasis Investments, the firm that owns the rights to the successful "Rambo" movies, when Anabasis offered $55 million for WP Films' 27% stake and Orion management's warrants that, if exercised, would equal about 12%.
A higher offer for the same block of stock was made Tuesday, although not disclosed until Thursday, by Los Angeles-based Trafalgar Holdings, which is controlled by former FCA Chairman Charles W. Knapp.
Trafalgar approached Warburg, Pincus to offer $8.50 cash per warrant and $14.50 cash per common share but only on the condition that Trafalgar gain control of the board. That bid was apparently blocked after Trafalgar was advised by Warburg, Pincus that Orion management would not relinquish control, according to Trafalgar Executive Vice President Donald L. Reynolds.
William Bernstein, Orion executive vice president, said Thursday that he is unaware of the Trafalgar offer but noted that he and his three colleagues have said their warrants are "categorically not for sale."
The investment provides Viacom entree into the motion picture industry, while mounting a potential barrier to an unwelcome takeover bid. In recent months, New York-based Viacom has been the object of speculative stock trading, peaking when executives at JMB Realty in Chicago disclosed holdings of about 11.6%.
Viacom, which has been on an acquisition spree, tried last month to acquire a 50% stake in the MGM studio, but the talks collapsed. Viacom's decision to invest in Orion could spell an end to its interest in reviving the MGM talks with Turner Broadcasting System, which is in the process of buying the parent, MGM/UA Entertainment.
In a prepared release, Orion Chairman Arthur B. Krim said that he and Viacom Chief Executive Terry Elkes have "entered into preliminary discussions relating to more meaningful involvement by Viacom in Orion." The company did not elaborate.
Orion was launched four years ago by a former United Artists management team with the acquisition of Filmways and a $26-million cash infusion by WP Films and Home Box Office, a Time Inc. unit. Home Box Office's 800,000 warrants are not included in the sale to Viacom, Orion's Bernstein said.