Lear, Perenchio Raise Bid for Evening News : $562-Million Offer May Spark Bidding War

Hollywood executives Norman Lear and A. Jerrold Perenchio on Monday sweetened by 25% their hostile takeover offer for Evening News Assn., a Detroit-based newspaper publisher and broadcaster.

Although some Wall Street analysts described the $562-million bid as still too low and doubted its success, they called the move a shrewd risk that may scare away other potential bidders or perhaps even succeed in buying the company at a relatively low price.

Many involved now predict that a bidding war for the company may break out. But as long as Lear and Perenchio are the only bidders, the analysts said, the chance exists that Evening News stockholders might take the offer fearing that nothing better will follow.

Closely held Evening News owns nine newspapers, two radio stations and five television stations. Its largest asset is the 666,949-circulation daily Detroit News, that city’s largest newspaper.

Court Hearing Due

Lear and Perenchio, who originally offered $1,000 a share, or $453 million, for the company on July 29, raised that to $1,250 on Monday and also extended the offer until Aug. 30. This allows them time to argue before a federal appeals court in Michigan that their offer is not subject to the restrictions of the Michigan Take-Over Offers Act, a state law designed to inhibit hostile takeovers of companies in the state.

A U.S. District Court already has ruled against them. The appellate court hearing is scheduled to begin today.

Lear and Perenchio also amended their original tender offer so that they are not obligated to buy any shares offered to them until they are offered at least 51% of the company.

A spokesman for Lear and Perenchio’s company, L. P. Acquisition Inc., declined to comment Monday on whether that initial offer had attracted any shares.

Evening News spokesman Mike Davis, however, said the new bid suggests that “apparently they are not getting many takers.” Davis also said that Evening News’ board would consider the new offer and make a recommendation.

Alternatives Studied

He added that Evening News’ management, along with investment bankers, is studying alternatives to improve the company’s financial situation. Analysts have speculated that Evening News might try to sell to a more friendly company, seek a merger to expand its base or restructure by selling various assets and buying others.

Much of the pressure to sell or restructure comes from the company’s roughly 300 shareholders, most of whom are heirs of James E. Scripps, who founded the company in 1873. Some of the heirs are believed to be unhappy with the company’s 4% annual after-tax profit margin, and a group controlling about 25% of the stock has already hired an investment firm to solicit buyers.