Warner Agrees to Buy Lorimar for $700 Million

Warner Communications Inc. today agreed to acquire Lorimar Telepictures Corp., the producer of “Dallas” and other hit television shows, for about $700 million in Warner stock.

The surprise announcement came just four weeks after Lorimar and Warner said they were calling off merger discussions begun in March.

Industry analysts said the companies may have gone back to the negotiating table because Lorimar’s ailing performance and falling stock price left it increasingly vulnerable to a hostile takeover bid.

TV Business Weak

The acquisition of Lorimar and its envied first-run television programming business is expected to strengthen Warner. It owns the Warner Bros. film studio and the nation’s second-biggest record company, but its television business is weak.

Under the terms of the deal, Lorimar shareholders will receive 0.415 shares in Warner stock for each of their common shares. However, Lorimar may terminate the agreement if the closing price results in a stock swap worth less than $15 a share.

Lorimar’s stock fell 12.5 cents to $13, suggesting that investors are not wholly pleased with the deal.

Dissident Lorimar shareholder Marvin Davis, who sold 20th Century Fox Film in 1985 to Rupert Murdoch, recently said he would be willing to pay $17 a share in cash for Lorimar if he were allowed to examine the Culver City, Calif., company’s books.