Marvin Davis Continues His Shopping Spree : He Passed on Cowboys, but Richest Man in L.A. Wants Northwest Airlines Badly
Marvin Davis, the richest man in Los Angeles, is on a billion-dollar shopping spree.
He bought a pay-television service for $635 million. He looked over the Dallas Cowboys, but didn’t buy America’s team. He considered buying the Los Angeles Herald Examiner, but concluded that the newspaper was too sick after looking at its books.
Now he’s trying to buy Northwest Airlines.
With up to four other bidders competing for the airline, Davis shows few signs of slowing. Yet, says one longtime friend, Davis’ quest for the airline won’t distract him from other potential investments. “One deal has nothing to do with the other,” says Hollywood film producer Mace Neufield.
At 6-foot-4 and 300 pounds, Davis is an imposing figure. A voracious deal maker with an apparent taste for high-profile companies, he has, during the past few years, bid for CBS and Lorimar, and bought--and sold--20th Century Fox.
A New York native, he got his start in the early 1960s as a wildcatter in the Rocky Mountains, picking up oil leases cheaply and patiently drilling dry holes until he struck oil. Davis’ success as an oilman attracted investments from “Star Wars” producer George Lucas and such prominent political figures as Henry A. Kissinger and Gerald R. Ford.
Charms His Opponents
During the 1980s, Davis invested oil profits in such far-flung businesses as hotels, restaurants, golf courses and ski resorts. After buying Fox in 1981, Davis took up part-time residence in Los Angeles, paying country singer Kenny Rogers a whopping $20 million for his Beverly Hills estate, “The Knoll.” When not in Los Angeles, he shuttles in his private jet between homes in Palm Springs and Denver, where his oil business is based.
Guarded about his personal and business affairs, Davis, 63, rarely speaks to the press and through a spokeswoman, refused an interview for this story. When Davis does talk, he reveals little. Responding to a reporter’s question about Northwest recently, Davis commented, “It’s quite a story, isn’t it?”
Folksy and unassuming, Davis apparently can charm even his opponents. After meeting with Davis for 90 minutes three weeks ago, Minnesota Gov. Rudy Perpich, who is trying to protect Northwest from a takeover, said he liked Davis. “I felt like I had known him for a long time,” Perpich says.
Perpich says Davis outlined his plans for Northwest Airlines but also chatted about his struggle to lose weight and his father’s boxing career. “You don’t think he is a billionaire--until you see him get off his 727 by himself,” Perpich says.
Davis has had a similar effect on some entertainment industry executives who brushed against him over the years. Norman Levy, an ex-Fox executive who sued the studio after he was fired in 1984, now gushes with praise for his former boss. Levy says Davis is “wonderful, warm and very supportive,” with “terrific instincts about people.”
“Of course,” he says, “I wish there had been a nicer way to leave the company.”
As a studio owner, oilman Davis hit a lot of dry holes. Fox turned out a succession of box-office flops under his ownership, such as the forgettable “Sixpack,” the story of a stock car racer who takes in six orphans, and “Rhinestone,” featuring Sylvester Stallone as a singing New York cab driver. Fox piled up losses so deep that in 1984 the company said it didn’t have enough cash to finance its operations.
Nonetheless, Davis left Fox a richer man. In 1985, he sold the studio in stages to media mogul Rupert Murdoch for a $350-million profit, keeping for himself prime Fox properties--the swank Pebble Beach golf course and resort, and a ski resort in Aspen.
Davis seems to sense the right time to buy a property--and the right time to sell it. In 1981, just before oil prices crashed, Davis sold some oil fields to Canadian distiller Hiram Walker for what was later viewed as a high price of $630 million. In 1987, he sold the Beverly Hills Hotel to the Sultan of Brunei for a quick $65-million profit. The hotel had special meaning for Davis because he and his wife, Barbara, honeymooned there. Nonetheless, he sold it after owning it for only one year.
Davis also has a talent for raising huge sums to finance his acquisitions. He bought Fox with just $50 million of his own money, borrowing from banks most of the $722 million he paid for the studio. Similarly, Davis plans to borrow most of the $2.7 billion needed to buy Northwest under his original offer, putting up just $300 million of his own funds. The airline’s management contends that Davis can’t pay off the huge debt without selling off chunks of the airline--something Davis has pledged not to do.
Bruised Some Feelings
Forbes Magazine, chronicler of the super-rich, pegs Davis’ wealth at $1.6 billion, making him the richest Southern Californian next to real estate magnate Donald Bren. But on his way to becoming a billionaire, Davis has bruised some feelings. A recent Securities and Exchange Commission filing shows that Davis is fighting three suits by longtime Houston business associate John A. Masek, who claims Davis broke a contract to buy pipe from him, among other things. In 1986, Davis reportedly paid ex-Fox Chairman Dennis Stanfill $4 million to settle a defamation suit. And in the mid-1980s, Davis was forced to buy out some unhappy oil investors, including producer Lucas and Greek shipping magnate Stavros Spyros Niarchos.
There’s no evidence that lawsuits have slowed Davis down. With the Prudential Insurance Co. as a partner, he acquired Spectadyne, a service that supplies pay-per-view movies to hotels, after pursuing it on and off for two years.
He’s also passed up a number of deals. Three weeks ago, his advisers toured the Los Angeles Herald Examiner, but well-connected sources say Davis decided against buying the ailing newspaper. He decided not to bid on the Dallas Cowboys last year after sending his son, John Davis, to check out the team. And in 1986, he dropped out of the bidding for historic Laird International Studios where “Gone with the Wind” and “Citizen Kane” were filmed. “Everyone has their limits,” Davis said after newspaper publisher Gannett topped his $20-million bid by $4 million.
If Davis acquires Northwest, it will be his biggest deal. Last week he declared a truce with the airline’s management, dropping--for now--a hostile $90-a-share tender offer and proxy contest to replace the airline’s directors. Along with several other bidders, said to include Los Angeles investor Alfred A. Checchi and Kolhberg Kravis Roberts & Co., a New York buyout specialist, and even possibly the International Assn. of Machinists, Davis is reviewing confidential information provided by the airline and has indicated that he may raise his offer.
Even if Davis lost his bid for the airline, he wouldn’t walk away empty-handed. With NWA’s shares trading at around $105, Davis has paper profits of $35 a share on his 3% NWA stake, or about $30 million. But his advisers say Davis won’t happily settle for a multimillion-dollar consolation prize.
“He wants this airline,” says Josiah O. Low III, a senior vice president with Donaldson, Lufkin & Jenrette, the investment bank hired by Davis. “No ands, ifs or buts about it.”
