Blair Agrees to Merge With a Steinberg Unit

The marketing and broadcast firm John Blair & Co., seeking to elude a magazine publisher’s hostile takeover bid, said Tuesday that it has agreed to be acquired by a unit of corporate raider Saul P. Steinberg’s Reliance Group Holdings.

A source close to Blair said the Reliance Capital Group offer is worth about $300 million, or $31 a share, including what shareholders will receive in shares of Blair’s ADVO-System coupon marketing unit, which is to be spun off as part of the deal.

Closely held magazine publisher Macfadden Holdings last April offered $25 a share in cash for all outstanding shares of Blair, which owns five TV and four radio stations and is the largest advertising sales representative for independent TV and radio stations.

In a statement, Blair President Jack Fritz said the Reliance offer would provide shareholders “superior value to the highly conditional offer” of Macfadden. He said Blair, which owns two Spanish-language television stations in Puerto Rico and one in Miami, was “well suited” to be acquired by Reliance, which owns KVEA-TV Channel 52 in Los Angeles.

Considering Next Step

Macfadden President Peter Callahan was meeting late Tuesday with lawyers and financial advisers to consider how to react to the proposal. “We’re still considering what they’ve put on the table and what we might do in return,” spokesman Michael Boylan said.

The publishing firm is based in New York and owns True Confessions, Teen Beat and Modern Romances magazines.

A source close to Blair said the cash portion of the deal was worth about $19 a share, the debentures $7 a share and the ADVO shares about $4 each.

However, the market may place a lower valuation on the debentures and the ADVO shares. Blair stock closed at $28.25 a share in composite trading, up $1.75 a share.

Blair’s statement said the offer is subject to several conditions, including the tender of 51% of Blair’s shares and Reliance’s raising money to finance the transaction. Reliance’s financial adviser, Drexel Burnham Lambert, has said it is confident that it can raise the money.

William Suter, analyst with the Merrill Lynch brokerage in New York, said the offer “seems like a pretty good one.”

The takeover threat emerged after Blair, not long ago among the highest flying of media stocks, blundered in a heavily leveraged campaign to expand ADVO. As its stock price plunged, the company lost $31 million on revenue of $631 million in 1985.

Sought ‘White Knight’

It has sold a newspaper coupon business and one of three printing subsidiaries as part of a restructuring aimed at strengthening its balance sheet.

Blair said it would seek an alternate purchaser--a “white knight,” in takeover parlance--in May, when its board voted to reject the Macfadden offer as “inadequate.” The board warned at the time that the company’s business would be hurt by Macfadden’s venture into two sexually oriented magazines, Chic and Pillow Talk.

Thomas M. Daly, a spokesman for Blair, said the company had discussed an acquisition with several firms, although he declined to identify them.

Steinberg could not be reached for comment.

The New York financier gained a reputation as a corporate raider after selling back shares to a number of companies that feared takeover. Among them was Walt Disney Co., which repurchased a 12.2% stake from Steinberg in 1984 for $325 million, earning him a $31.7-million profit plus $28 million for “expenses.”