Financier Drops Bid, Will Reap $25-Million Profit : Cooke to Sell Stake in Multimedia

Ending his threatened hostile takeover bid for Multimedia, sportsman-financier Jack Kent Cooke agreed Friday to sell his 10% stake in the broadcast and newspaper conglomerate for $70 a share, or $113.9 million. The purchaser is a corporation formed by management and founding families to recapitalize the company.

Based on Cooke’s figures of an average cost of $54.95 for each of his shares, he will turn a profit of almost $25 million on stock that he began buying only last March. He also will be reimbursed an unspecified amount for his expenses.

Cooke, who owned two Los Angeles professional teams--the Lakers in basketball and the Kings in hockey until he sold them and the Forum to Jerry Buss in May, 1979--presently owns the Washington Redskins pro football team and the Chrysler Building in New York. He maintains business offices in Middleburg, Va.

Greenville, S.C.-based Multimedia, which said it now plans to go ahead and submit to shareholders a recapitalization plan backed by the firm’s management and founding families, owns five television stations and 10 radio stations. It also owns 14 daily and 43 non-daily newspapers and operates more than 100 cable-TV systems.

In April and May, the company had rejected Cooke’s offers of $63 and then $65 a share. The firm also rejected in April offers of $61 a share from Lorimar, the Culver City-based entertainment firm, and $60 a share from a group led by former Treasury Secretary William E. Simon.

Cooke and Metromedia announced their agreement Friday, four days after Cooke announced that he would go ahead with a tender offer of $70.01 for another 6.73 million shares, or 40.3% more of Metromedia. Insiders control about 43% of the stock.

Despite clearance by the Federal Communications Commission on July 12 to proceed with his effort to obtain control of the TV and radio stations, Cooke still faced rear-guard actions by management in suits that he had brought in federal and state courts to block the recapitalization plan.

“The prospects of protracted litigation,” Cooke said Friday, “is unacceptable to me. Rather than continue it, I have decided it is better for all concerned to allow the (recapitalization) to become effective.”

Cooke also said he was disappointed that he was unable to persuade family founders and company management to sell to him. He added that he has concluded that the “wise course of action” is to respect their decision to retain control.

The announced agreement, which is subject to approval by a South Carolina court, includes provisions for Cooke’s One, Two Corp. to vote its shares on the recapitalization in the same manner as the majority of shareholders unaffiliated with management or the founding families.

Cooke agreed to dismiss his suits and not to make any further acquisition proposals or to buy any Multimedia stock for five years.

Management’s recapitalization plan offers shareholders a chance to retain some shares and sell others to the firm for $41.26 a share cash plus a bond with a $26.54 face value. It also offers the option of a bond with a $125 face value in place of cash.