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Speculation on Higher Bid for Viacom Mounts : Rumors Fueled as One Investor Boosts Holding, Another Acquires Stake

September 18, 1986|PAUL RICHTER | Times Staff Writer

NEW YORK — Speculation grew Wednesday that a higher bid would soon be made for Viacom International as one major shareholder disclosed an increased stake in the entertainment and communications firm and another group disclosed that it has purchased a large interest.

Viacom's stock, which had risen sharply Tuesday after a management-led investor group offered to take the New York-based company private, gained another $1.625 a share and closed at $42 as 3 million shares were traded. Further fueling the rise was rampant Wall Street speculation that Coca-Cola Co. may soon offer about $45 a share for the cable-TV and entertainment concern.

Five investment groups managed by the New York firm of Gollust, Tierney & Oliver disclosed that they jointly hold a 12.04% stake in Viacom, and plan to examine the investor group's proposal to determine whether the price is a fair one.

Meanwhile, National Amusements, a Boston-based movie theater chain, disclosed that it has raised its stake in Viacom to 9.92% from the 8.7% it had disclosed in Securities and Exchange Commission filings last Friday.

Dissatisfaction With Price

And on a third front, Capital Research, a Los Angeles-based institutional investor holding 10% of Viacom's shares, indicated its dissatisfaction with Viacom's proposed buyout price.

"I think the $40.50 (per share offer) is a bit on the light side. I would like to get more money for my clients' holdings, but I am still studying the deal," Capital Research Senior Vice President Gordon Crawford said.

Viacom, long the subject of takeover talk, received a $2.73-billion leveraged-buyout offer from a management group that includes President and Chief Executive Terrence A. Elkes, the Wall Street investment organizations of Drexel Burnham Lambert, First Boston, and Donaldson, Lufkin & Jenrette Securities Corp., and the Equitable Life Assurance Society.

Augustus K. Oliver, general partner of Gollust, Tierney & Oliver, said the firm planned to "get together with the company's management and the investment banks to try to get an accurate assessment of what the market value of the company really is." One of the five investment organizations under Gollust's umbrella is Coniston Partners, which last year proposed to liquidate Storer Communications and then profited handsomely when the Miami-based communications company was taken private in a leveraged buyout.

Skeptical on Coca-Cola

Oliver declined comment on whether his firm would make a counteroffer, but was skeptical that the rumored bid from Coca-Cola would materialize. Noting that the soft-drink firm is perennially mentioned as merger partner for entertainment concerns, he said he would "believe that when I see something on the table."

Coca-Cola officials at the company's Atlanta headquarters were unavailable for comment.

Gollust, Tierney said in a statement that its shares were purchased over the past two months at an average cost of about $31.90 a share. They were purchased, the firm said, because of Gollust, Tierney's view that the value of Viacom's assets exceeds its current market price.

National Amusements said the additional block of 409,300 shares was bought between Sept. 12 and Sept. 16 at prices between $32.375 and $40. Sumner M. Redstone, National Amusement's chairman, said the company was "caught by surprise" by the buyout offer, and was still studying it to determine what step to take.

The closely held company owns theaters with 360 movie screens in 15 eastern states, he said.

One analyst, Kenneth Berents of the Legg Mason Wood Walker brokerage in Baltimore, was skeptical that any of those holding major stakes in Viacom would make a counteroffer to the management group's. "They may just be in there pushing to have the leveraged buyout done at a better price," he said.

Times staff writer Kathryn Harris in Los Angeles contributed to this story.

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