The final legal barriers to Matsushita Electric Industrial Co.'s landmark purchase of MCA Inc. fell on Friday, clearing the way for the completion of the $6.59-billion deal.
U.S. District Judge Manuel L. Real in Los Angeles denied a summary judgment motion sought by MCA shareholder Lawrence Epstein and others. Epstein had charged that a preferred stock payment given to MCA Chairman Lew R. Wasserman was unfair to the entertainment company's common stockholders, but Real ruled there was insufficient cause to grant an injunction.
In a separate case, U.S. Supreme Court Justice Antonin Scalia rejected Go-Video Inc.'s request for an emergency injunction against the MCA sale. The Arizona-based electronics company had sought to postpone the deal until its antitrust claim could be heard.
Matsushita said it would complete its tender offer for MCA shares late Friday, as planned. The Japanese electronics giant becomes the majority shareholder of MCA, which owns Universal Pictures and theme parks, but will not assume ownership of the company until early next year.
The transfer could take as little as two weeks if 90% or more of the shares are tendered, a company spokeswoman said. Otherwise, it could be several months because of legal complexities.
Matsushita's $66-a-share offer was accepted last month following months of discussions and a week of hard bargaining between the two companies. Matsushita recently announced that it will finance the deal with $1 billion in cash and $5 billion in loans and preferred stock. With $38 billion in sales last fiscal year, Matsushita is one of world's largest corporations.
MCA shareholders will not receive payment for their stock until 1991, but will enjoy the tax breaks available this year if their shares were tendered before Friday's deadline. Stock in an MCA subsidiary, WWOR-TV, will also be spun off to shareholders under the deal.
Epstein's suit, the last of several shareholder cases that required an immediate court hearing, centered on the preferred stock awarded to Wasserman as part of the purchase agreement. Ernest T. Kaufman, Epstein's attorney, argued that Wasserman's deal violated Securities and Exchange Commission rules that guarantee equal treatment to all stockholders.
Wasserman's payment, designed to remove his tax burden, will come in the form of a new preferred stock with a face value of $327 million and an 8.75% annual dividend. Wasserman owns 5 million of MCA's shares outstanding. Attorneys in the case said he would have faced a capital gains tax of more than $100 million had he accepted the same payment as common stockholders.
"The problem Mr. Wasserman had is the same as other shareholders--taxes," Kaufman said. "He had an opportunity to work it out. All they want is the same opportunity."
Lawyers for Matsushita and MCA countered that Wasserman's payment was arranged prior to the tender offer. They also argued that Wasserman was entitled to make his own deal, since the sale could not go through without his shares on the table.
Herbert M. Wachtell, acting on behalf of MCA and Wasserman, said there is no proof that Wasserman got a better deal for his shares.
He also warned that the deal could collapse if the sale was delayed, since Matsushita's offer expired late Friday. "This gives them an opportunity to walk away," Wachtell said. "It also emasculates a very carefully structured deal."
Real, in his ruling, said he had no power to force Matsushita to offer common shareholders the same deal as Wasserman. "They can just say, 'So long, judge,' " Real observed. The case is expected to go to trial next year.
MCA stock closed Friday at $69.125, up 62.5 cents, in heavy New York Stock Exchange trading.