Shamrock Cuts Offer for Rest of Wherehouse

Shamrock Holdings offered $92 million on Tuesday for the 90% of Wherehouse Entertainment it does not already own.

Shamrock, a Burbank investment company owned by the family of Roy E. Disney, nephew of the late Walt Disney, went ahead with its $12-a-share cash offer even though Wherehouse on Monday disclosed that it implemented a new, so-called poison-pill plan that would make the company much more expensive.

Shamrock, citing last month’s stock market crash, last Thursday disclosed that it would launch the $12-a-share hostile tender offer this week for 7.7 million shares, lowering its bid from a $14.25-a-share offer made Oct. 13 before the stock market’s severe tumble.

$225.5 Million in Sales

Directors of Wherehouse rejected that first bid and are widely expected to oppose the latest Shamrock offer as well. Company executives could not be reached Tuesday for their comments.

Wherehouse--a Torrance chain of 200 stores that mostly rent videos and sell records, cassette tapes and compact discs--had sales of $225.5 million in the year ended Jan. 31.

Shamrock, which owns 10.2% of Wherehouse, or about 867,000 shares, has said that if a merger agreement isn’t reached with Wherehouse in about a month, it will lower its bid further to $10 a share and try to buy enough shares to raise its stake in Wherehouse to 67%.

Wherehouse’s new anti-takeover method, in effect, replaces one poison pill with another. Although specific details of the new anti-takeover plan have not been made public, analysts and lawyers said they believe that it probably is more solid legally than the previous one.

Shamrock has insisted that Wherehouse remove the poison pill as a condition of its offer, and it sued last Friday in Los Angeles Superior Court to have the poison pill declared void.

Protecting Shareholders

Robert E. Fischer, a New York lawyer who represents Wherehouse, would only say “the new plan more effectively protects the shareholders in light of current law.”

Under the new anti-takeover plan, a Wherehouse shareholder would be allowed to buy $30 in stock at half of the market price for every share of common stock owned. Under the previous plan, the shareholder would be allowed to buy $60 in stock at half the market price.

That plan would be triggered by conditions that Wherehouse has yet to disclose publicly. In general, poison pills are triggered when it appears that a hostile suitor has obtained a large enough stake so that the bid has a good chance of succeeding.

Shamrock, which is making the offer through a subsidiary called Shamrock Acquisition II, has said it has a $110-million commitment from Wells Fargo Bank to finance its offer.

Shamrock’s finances also were bolstered last month when it made a $125-million profit after the company and its partners sold Central Soya, an Indiana soybean processor, to Ferruzzi Group, an Italian agricultural concern.