P.M. BRIEFING : Warner Overcomes Chris-Craft Obstacle to Merger With Time

Warner Communications Inc. said today it settled a longstanding dispute with its largest shareholder, clearing another potential obstacle to the entertainment company’s planned $18-billion merger with Time Inc.

The shareholder, Chris-Craft Industries Inc., joined Time and Warner in announcing the settlement that the companies said would permit the Time merger with Warner to proceed “without any delay or adjustment.”

Warner and Chris-Craft had entered an agreement in 1984 in which they acquired stakes in each other in what was seen as a defensive maneuver by Warner to avoid a hostile takeover.

But in the years since the pact was signed, relations soured between Warner and Chris-Craft and there was some concern it could delay the proposed Warner merger with Time.

Earlier this month, Warner sued Chris-Craft, seeking an order that would have compelled Chris-Craft to resolve any objections to the merger. That litigation was resolved under today’s settlement.