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Icahn Confirms Stake In Viacom; Company Posts $530 Million Offering

May 15, 1986

NEW YORK (AP) _ Financier Carl C. Icahn on Thursday confirmed he controlled a 16.95 percent stake in Viacom International Inc., and said he had told the diversified media company he was prepared to negotiate a $75 a share cash merger.

In a filing with the Securities and Exchange Commission, Icahn disclosed his stake in Viacom, which on Wednesday had registered a $530 million securities offering in an attempt to prevent a hostile takeover attempt by Icahn.

Icahn also stated that if he was unable to reach an agreement with Viacom on his merger offer, he intended to continue examining a possible takeover of the company.

Viacom officials had no comment on Icahn’s offer, said spokesman David R. Fluhrer. However, Icahn said in his filing that his representatives ″haven’t received any encouragement with respect to the acceptance of a negotiated cash merger″ with Viacom.

Icahn’s $75 a share offer was not adjusted for Viacom’s recently announced two-for-one stock split and assumed the redemption of the company’s outstanding stock rights, the filing said.

Based on the roughly 17.1 million pre-split common shares he does not control, Icahn’s offer would be worth about $1.28 billion.

Icahn also indicated that discussions with the company have covered the possibility of an agreement to swap his Viacom shares for a combination of a joint venture arrangement and either Viacom securities or cash, or both.

Viacom said in the registration of its securities offering that it might use the proceeds to buy back some of its outstanding common shares, but would not buy shares held by Icahn’s group ″except on terms available to all shareholders.″

Viacom also said it might use the proceeds from the offering to pay off a portion of its bank debt under a current credit agreement.

In its prospectus, Viacom said that discussions held with Icahn on Tuesday over the sale of his stake in the company were inconclusive.

The company also said it had held inconclusive talks with various third parties regarding possible investment in Viacom, indicating it was seeking a ″white knight,″ or friendly suitor, to help ward off any hostile takeover. Viacom noted it would withdraw the securities offering if such a third party transaction occurred.

Icahn said he and seven companies he controlled held more than 3.5 million Viacom common shares, including 2.9 million shares bought at prices ranging from $62.25 to $70 a share from April 16 through May 9.

Viacom traded at $65.50 a share late Thursday on the New York Stock Exchange, up 50 cents from Wednesday’s closing price.

Viacom’s offering includes $250 million in notes due in 1996 and nearly 7.48 million units each worth one share of common stock and a warrant to purchase another common share, adjusted for the two-for-one stock split, for a maximum offering price of $37.94.

The flood of new stock would dilute the holdings of a potential suitor, making it much more expensive to purchase Viacom.

In addition to the securities offering, the Viacom registration statement would limit the company’s ratio of debt to total capitalization and require approval of its independent directors for the sale of more than 5 percent of its total assets.

The moves were aimed at preventing a hostile suitor from launching a takeover bid to be financed through the later sale of Viacom assets or issuance of large amounts of debt, analysts have said.

Viacom said a hostile takeover could harm its businesses, noting it expected to lose key executives and managers if Icahn won a takeover battle. The company also noted there could be problems related to federal approval of broadcasting license transfers and to the requirement that some cable franchise holders approve any ownership changes.

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