RCA Prepared to Divest Consumer Electronics Unit
General Electric and RCA Corp. have agreed to divest RCA’s consumer electronics business if necessary to win government approval of GE’s proposed $6.28-billion acquisition of RCA.
But GE reiterated Thursday that it did not expect the government to raise antitrust objections that will force the divestiture of RCA’s $2-billion consumer electronics unit, which, according to industry estimates, is the nation’s leading seller of color televisions and videocassette recorders.
The two companies combined account for an estimated one-fourth of all television sets sold in the United States and one-fifth of the VCRs.
The agreement covering the RCA unit’s potential disposal was part of the companies’ overall merger agreement that was filed Wednesday with the Securities and Exchange Commission.
The agreement “in no way requires or implies the sale” of the RCA unit, said GE spokesman Bruce Bunch from the company’s headquarters in Fairfield, Conn. “We don’t anticipate any problems with the merger. However, a definitive merger agreement by definition has to cover all possible contingencies.”
Bunch said that, if the government did require that the unit be divested, it would not necessarily have to be sold to another company. Under one alternative, he said, the unit might continue to be owned by GE but would operate independently.
GE’s proposed acquisition of RCA for $66.50 a share, which would be the largest non-oil corporate marriage in U.S. history, remains subject to approval by RCA’s stockholders in addition to regulatory agencies. The companies expect to close the deal in the second half of 1986.
Like RCA, GE sells color TVs, VCRs and other consumer electronics, and both companies also produce various aerospace and defense systems.
Under their merger agreement, GE also has the right to terminate the acquisition if the government requires that GE divest its aerospace business or NBC.
Sell Some Radio Stations
RCA and GE also said the Federal Communication Commission, which must approve the transfer of broadcast licenses, might force them to sell some of RCA’s AM and FM radio stations in order to gain FCC clearance of the merger. The companies did not specify which stations they might sell.
RCA also is the leader in the domestic VCR market, with a 16% share, while GE is sixth with about 5%, Television Digest estimates.
RCA’s color TVs are manufactured in Bloomington, Ind., and the company sells VCRs manufactured by Hitachi Ltd. of Japan.
GE currently makes color TVs in Portsmouth, Va., but recently it announced plans to end its own production and to sell TVs made by Matsushita Electric Industrial Co. of Japan beginning next August.
