Seagram after Time Warner

Seagram after Time Warner – Again

Rumors abound once again that Seagram’s president, Edgar Bronfman, wants to enrich his liquor company with Time Warner’s multi-faceted company interests, including movie, music, cable and publishing assets.

Bronfman has stated his intent to purchase at least 15% of Time Warner in the past, and is very near the end of that goal. That statement and the rampant rumors about the potential takeover have fueled Time Warner stock up 3-7/8, to $40, in heavy trading as early as May 3rd.

Not only do rumors have Bronfman taking over Time Warner, they have him listed as teaming up with both Tele-Communications Inc. and US West or Bell Atlantic and QVC — in order to obtain his goal. Seagram is also rumored to sell its 24.3% stake in DuPont to raise $9.7 billion towards the Time Warner takeover, though DuPont has stated that the rumor was fueled by a $3 billion shelf registration DuPont filed on April 29. DuPont says it is only aiming to refinance debt.

UBS Securities’ Edward Hatch says it is “unrealistic” to think of Seagram’s large stake in Time Warner as “completely passive”. Contrarily, Dennis McAlpine, an analyst at Josephthal Lyon & Ross, finds the idea of Seagram being able to pay $20 billion for the acquisition and then take on Time Warner’s $12 billion in debt completely laughable.

If these rumors continue to run rampant, even jumping on the rumor bandwagon couldn’t hurt: Time stock is expected to begin trading at $42 per share in the near future, and could go as high as $48 per share before the year is out.

The entertainment mogul David Geffen was also rumored to be seeking to make a takeover bid for Time Warner. Mr. Geffen vehemently denied the rumor that he would make a bid for Time Warner, however. The other companies rumored to be in the market for Time Warner, with or without Seagram, have declined comment, stating that they do not react to speculation.

The most detailed rumor had Seagram making a $55 per share offer for Time Warner for the approximately 324.8 million Time Warner shares it doesn’t already own. However, the rumors have proven to be as yet completely unfounded. Time Warner still has a poison bill in effect as a direct response to Seagram’s 15% acquisition last summer.

Copyright Quality Services Company May 16, 1994

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