Loews Says It Owns 9.84% of CBS Stock : May Boost Holding to 15%; Could Profit if New Suitor Appears

In a sign that CBS may not have seen the end of takeover speculation, Loews Corp. disclosed Monday that it owns 9.84% of the broadcasting company’s stock and may seek to buy as much as 15%.

Wall Street professionals speculated that Loews may be positioning itself to take advantage of any further hostile bids for CBS--either by profiting from a market run-up or by offering to become a friendly counter-bidder, a “white knight” in Wall Street parlance.

Loews has already disclosed that it offered earlier to buy CBS in a negotiated deal. The network rejected the overture.

In any event, the Loews disclosure Monday may keep the market for CBS stock lively.

“I guess Loews is keeping CBS in play,” said Edward Atorino, a securities analyst for the investment firm of Smith Barney, Harris Upham & Co.

CBS shares closed Monday at $109, up $3.50 from Friday in trading on the New York Stock Exchange.

Still Vulnerable

Market analysts were divided on the prospects of another bid for CBS, which defeated a hostile offer from Atlanta cable-television entrepreneur Ted Turner by offering to buy more than 21% of its own stock and loading the bid with balance-sheet restrictions that made Turner’s debt-heavy bid impossible.

Turner withdrew his offer last week and reached an agreement to buy MGM/UA Entertainment Co.

Many expect the price of CBS shares to sink to about $100 in the aftermath of the stock buy-back and the absence of another takeover bid. Some analysts, however, argue that the network is vulnerable to a corporate raider as long as its shares remain at a price significantly below its asset value of more than $200 per share.

Loews, a conglomerate that derives its name from the theater chain from which it grew but gets most of its revenues from cigarettes, hotels and insurance, is managed by brothers Laurence and Preston Robert Tisch, who are considered to be two of the country’s most sophisticated investors.

In filings Monday with the Securities and Exchange Commission, Loews said only that, subject to market conditions and other considerations, it intends to acquire a total of more than $15 million worth of CBS stock, but not exceeding 15% of the stock outstanding.

In a terse statement, CBS said it “accepts on good faith Loews’ statement that these stock purchases are for investments and beyond that, has no further comment.”

Loews’ SEC filings show it owned 2,975,300 CBS shares, or just under 10%, on July 31, the final day of the network’s repurchase program. CBS has said it will buy about 25% of all tendered shares for cash and securities valued at about $150 each.

Between July 31 and Aug. 8, the Loews filing said, it bought another 99,400 shares for a total of $10.8 million, or an average of $108.16 each. The company also said it has filed a report form with the government under the Hart-Scott-Rodino Act, as required whenever a corporation intends to buy more than 10% of another company’s stock. Under the act, Loews cannot hold more than 15% of CBS stock unless it files a further report.

Wall Street professionals had considered the Loews’ earlier purchase to be part of a complicated tax play in which its profits from CBS’ repurchase plan would be treated as dividends, which for a corporation are 85% tax exempt.

“Now that rationalization doesn’t really apply,” said John Bauer, a broadcast and cable industry analyst for Oppenheimer & Co.