Viacom Stock Price Jumps on Takeover Talk

Speculating that the company may soon be a takeover target, investors bid up the price of Viacom International shares by $5 on Tuesday as nearly 12% of its stock changed hands.

The entertainment company’s stock closed at a 52-week high of $63.25 and was the fourth most actively traded issue on the New York Stock Exchange.

Amid the heavy trading, Viacom notified the Securities and Exchange Commission that it intends to make a bid to acquire CBS’ KMOX television station in St. Louis and that it has formed a new partnership to bid for some Westinghouse cable-TV properties.

Review of MGM Unit

New York-based Viacom also said it is engaged in an intensive review of the MGM unit of MGM/UA Entertainment as part of its previously disclosed negotiations to buy 50% of several MGM businesses from Turner Broadcasting System. Turner has agreed to acquire MGM/UA next month for $1.5 billion.

One entertainment industry analyst, requesting anonymity, said that Viacom is “scrambling, doing these deals . . . (to try to) avoid being taken over.”

David Fluhrer, Viacom’s director of corporate communications, declined to comment on the speculative trading, but he denied that the company is hastily searching for acquisitions to discourage a takeover.

“All these moves are based on strategies developed long before there were any takeover rumors,” Fluhrer said.

Financial sources suggest that at least two different groups have accumulated significant holdings in Viacom’s stock.

One is believed to include Coniston Partners, the New York-based investment partnership that proposed the liquidation of Storer Communications earlier this year, triggering a $1.98-billion buy-out.

Augustus K. Oliver, a Coniston general partner, declined Tuesday to say whether his group holds any Viacom stock.

A second, unidentified party appears to be buying stock through Merrill Lynch, Pierce, Fenner & Smith, according to one financial services source. Merrill Lynch officials could not be reached for comment late Tuesday.

Stock Offering

Some Wall Street sources had expected potential bidders to show their hand Tuesday in hopes of forestalling Viacom’s issuance of 2.5 million new shares, expected today at $58.50 per share. That new issue will dilute the holdings of current investors.

Because of its stock registration, Viacom was obligated to notify the SEC of its plan to bid for the CBS television station in St. Louis and other significant business plans that could affect the company.

But Viacom did not disclose the amount that it may bid for KMOX-TV, and it noted that its bid might not prevail.

CBS recently decided to sell the station as part of a financial reorganization.

In a previous filing, Viacom had disclosed its role as a bidder for certain Group W cable-TV properties, but, on Tuesday, the company said it has joined forces with E. M. Warburg, Pincus & Co. to bid for systems serving 275,000 of Westinghouse’s 2 million cable subscribers. According to published reports, the Warburg Pincus group includes Group W Cable President Burton Staniar, Hallmark Cards and the wealthy Bass family of Fort Worth.

Viacom owns four television and eight radio stations and is a major distributor of television programs. It is also the nation’s seventh-largest cable operator.