Lorimar Gets $780 Million Bid from Marvin Davis
CULVER CITY, Calif. (AP) _ Investor Marvin Davis, who three years ago sold 20th Century Fox Film Corp., is trying to get back into the entertainment business with an unsolicited $780.3 million offer for loss-plagued Lorimar Telepictures Corp.
Lorimar, based in this Los Angeles suburb, said Thursday that Davis made the $17-a-share cash offer in a letter asking that takeover negotiations be arranged between him and Lorimar’s management. Davis indicated he may be willing to raise the offer.
The announcement came just three days after Lorimar disclosed it was holding preliminary talks on the possibility of being acquired by New York- based entertainment giant Warner Communications Inc.
Lorimar stock rose $1 a share to close at $15.37 1/2 after the announcement of the offer from Davis. The company has 45.9 million shares outstanding.
Davis’ offer is in the middle of the $14 to $20 per-share range that analysts have said Lorimar should be able to fetch.
In a brief announcement, Lorimar noted that Davis’ offer was subject to a number of contingencies and said it ″would bear Davis’ letter in mind.″
Davis has been seeking to get back into the entertainment industry since selling Fox to media magnate Rupert Murdoch in 1985 for $575 million. Davis had owned Fox for four years, but the company was beset by persistent losses.
Last year, he made an unsuccessful $321.9 million bid for the 90.6 percent he didn’t already own of Texas-based Spectradyne Inc., the nation’s largest supplier of cable television and pay-per-view movies for hotels.
Lorimar is a leading producer of original television programming, but in recent years it has been troubled as its ambitious plans to expand into other areas disintegrated and sometimes caused the company to incur losses or heavy costs that depressed earnings.
For the first nine months of its current fiscal year, Lorimar posted a loss of $82.6 million on revenue of $616.8 million. The deficit included $45 million in writedowns on five movies and $22 million in reserves for possible future losses in its home-video unit.
Management of both the movie and home-video units have been replaced.
For fiscal 1987 ended last March 31, the company lost $58.6 million, mostly because of restructuring costs, on revenue of $766.2 million.
On Wednesday, four disgruntled shareholders filed a class action lawsuit against Lorimar in federal court alleging the company overstated its income and net worth and unstated problems with its home-video unit, thereby causing investors to pay more for stock.
The suit, which seeks unspecified damages, was filed on behalf of shareholders who traded 30 million shares between Aug. 14, 1986 and Feb. 12 of this year. The plaintiffs, all from Westchester County, N.Y., were Ted Streit, Eli Berman, Shirley Sichel and Louis Haber. They bought Lorimar stock between last September and December.
Lorimar spokeswoman Sue Binford said the company had no comment, citing a company policy against responding publicly to pending litigation.