Trump’s Interest Behind Runup in MCA Stock
The price of MCA Inc. stock continued to rise Tuesday in heavy trading, fueled by last Friday’s disclosure that New York real estate developer Donald Trump might escalate his present small stake in the company into a 24.9% holding.
Shares of the entertainment Goliath closed at $47.50 on New York Stock Exchange, up $2.50, for a total gain of $7.75 a share in the two trading days since last week’s news about Trump galvanized the market. A total of 1.75 million shares of MCA changed hands Tuesday, making it the fifth-most active issue on the Big Board.
Arbitragers betting on a takeover attempt were among those who were buying MCA stock, industry sources said.
Meanwhile, the principal players of the drama were keeping a low profile.
The usually accessible Trump and his representatives remained unavailable for comment Tuesday, as was the case after the news last Friday.
At its Universal City headquarters, MCA remained officially noncommital on the situation following the three-day holiday weekend.
MCA itself had announced tersely last Friday that it had written notification from Trump, under the Hart-Scott-Rodino Antitrust Improvements Act, that he intended to buy at least $15 million in MCA stock and, “depending on market conditions,” might acquire up to 24.9% of its approximately 73 million shares.
The 375,000 shares that Trump reported owning would have cost him just under $15 million at last week’s price before the recent runup began.
Although Trump has followed through on some of his proposed acquisitions--such as that of Resorts International, a casino operator in Atlantic City, N.J.--he also has profitably sold his stock interests in other casino operators, including Bally Manufacturing Corp. and Golden Nugget Inc., after a runup in their prices.
Even if Trump does not eventually launch an unfriendly move against MCA, his action last week set off widespread discussion of potential “white knights” that would be amenable to a friendly deal with Lew R. Wasserman, MCA’s 74-year-old chairman and chief executive.
At least two New York securities analysts suggested that Nippon Steel Corp. of Japan might well have an interest in such a deal. Analysts Lisbeth Barron of Balis Zorn Gerard Inc. and Mara Balsbaugh of Smith Barney, Harris Upham & Co. noted separately that Nippon Steel not only has the means to pay a price satisfactory to Wasserman but already has a relationship with MCA--as its recently announced partner in developing a “Universal Studios Japan” tourist attraction.
Other candidates mentioned by industry sources as potential buyers for MCA--or for a share of its real estate and entertainment assets--include General Electric Co., Walt Disney Co. and Cineplex Odeon Corp. MCA owns 50% of Cineplex Odeon, a large movie theater chain, and is a joint venture partner with Cineplex in developing a studio tour attraction in Orlando, Fla.
Although some analysts said Trump’s action had put MCA “into play,” which could result in a change in management or control down the line, others voiced doubt both about Trump’s ultimate course and whether his moves would stampede the company into making a deal with a potential white knight.
“I personally don’t think anything is going to happen,” said Dennis Forst, vice president and senior analyst at Security Pacific Merchant Bank in Los Angeles.
However, he said, the company has a great array of assets, and many media and industrial companies could be interested in buying some or all of them.
Analyst Lee Isgur, a vice president at Paine Webber Mitchell Hutchins in New York, said: “I never believe in Trump, and I never believe there will be an MCA takeover without Lew Wasserman wanting it.” Trump, according to Isgur, has a history of selling his stock after its price has increased and “leaving everyone holding the bag.”
