Wherehouse Mum on Takeover Bid

Wherehouse Entertainment maintained its official silence Wednesday on a $113.5-million offer to buy the videotape, record and computer software chain.

The Torrance-based company’s stock price slipped 75 cents to close at $13.25 in quiet trading on the American Stock Exchange. On Tuesday, the firm saw a brisk $3.25 run-up in the price of its stock on news of the offer from Shamrock Holdings, a Burbank-based investment company controlled by the family of Roy E. Disney.

The $14.25-a-share offer was made in a letter dated Monday from Shamrock President Stanley P. Gold. Shamrock already owns 567,500 Wherehouse shares, a 6.7% stake, Gold said, giving its offer a value of about $113.5 million.

Analysts assumed that the company was stunned by the offer, as were they. They differed in their assessments of its fairness, and one questioned its sincerity.

What puzzled Ron Rotter, who follows the company for Morgan, Olmstead, Kennedy & Gardner in Los Angeles, was Gold’s statement that Shamrock would consider sweetening its offer “if additional value in Wherehouse can be demonstrated.”

“That’s one of the things that makes it smell a little funny,” he said. In that case, Shamrock’s motive might be to bid up the value of its own holding, Rotter suggested. But he added that the $14.25 offer seemed fair in light of the rocky times Wherehouse has encountered that crimped earnings in recent quarters.

Wherehouse’s net income fell 74% in the first six months of the year to $909,000 from $3.5 million, despite a 31% jump in sales to $125.1 million, compared to a year earlier.

“I’d be delighted (with the price),” Rotter said.

Keith E. Benjamin, an entertainment industry analyst with Silberberg, Rosenthal in New York, doubted that Wherehouse President Louis A. Kwiker would willingly agree to sell the company. “He’s done a fantastic job of turning that company around,” Benjamin said. “It seems highly unlikely he would give up control of his company without a fight.”

Rotter, on the other hand, noted that Kwiker’s personal holdings, which he estimated at 530,000 shares, would bring more than $7.5 million.

LEADING RECORD STORES Sales of pre-recorded music--records, tapes and compact discs--will total $4.5 billion in 1987, according to a study by entertainment industry analyst Keith E. Benjamin with the New York brokerage firm of Silberberg, Rosenthal & Co.

Listed below are the top companies, ranked by estimated sales for their fiscal year that will include Christmas 1987.

Company Headquarters Sales 1. Musicland Group Minneapolis $450 million 2. Wherehouse Torrance 250 million 3. Tower Records Sacramento 250 million 4. Sound Warehouse Dallas 180 million 5. Trans World Music Albany, N.Y. 170 million 6. Camelot Music N. Canton, Ohio 150 million 7. Record Bar Durham, N.C. 75 million 8. Turtle’s Records Atlanta 75 million

Source: Silberberg, Rosenthal & Co.

Los Angeles Times