Warner Chief Says He Won’t Move to Acquire Time Outright

Ending a weeklong silence on his strategy, Warner Communications Chairman Steven J. Ross on Monday said he would not attempt an outright acquisition of Time Inc. as a means of rescuing the merger imperiled by Paramount Communications’ rival $175-per-share offer.

Rumors that Warner would launch its own tender offer for Time--instead of sticking with some form of its previously announced stock swap, in which no cash would change hands--helped lift Time shares Monday to $175, up $4.75, on a volume of 1.5 million shares. But trading was also spurred by rumors of a $215-per-share bid being readied by Kohlberg Kravis Roberts & Co. and the Robert M. Bass Group, working separately or together.

“There is absolutely no truth to the rumor that Warner is about to tender for Time stock,” Ross told The Times. “Time has never been for sale. We’ve been in discussion (about a merger) for 2 1/2 years.”

The Warner chairman wouldn’t elaborate, but the decision was prudent, according to some Wall Street sources who have pointed out that such an action would jeopardize Warner’s own survival.

A tender offer for all or part of Time would require massive debt, no doubt depressing Warner’s earnings and stock price and infuriating its largest and oft-dissident shareholder, Chris-Craft Industries Inc.

No Bid From Time

Last month, Warner made certain concessions to Chris-Craft that effectively freed that company’s hand with its Warner shares, which account for 19% of Warner on a fully diluted basis. Warner made the concessions to smooth the way for the Time merger, which was due for a shareholder vote June 23.

By the same token, Time directors are believed to be leery of making a cash offer for Warner because it would depress Time’s earnings and stock price. A rash of shareholder suits no doubt would follow from those who preferred Paramount’s cash offer.

Time and Warner executives nonetheless appear determined to salvage their business combination, even if they must abandon the stock-swap terms that would have kept the combined company relatively debt free.

Most attention is focused on Time because its directors are expected to meet in the next 48 hours to plot their move. One upshot could be a plan to reconfigure the company’s financial structure, coupling a large dividend to Time shareholders with a Warner merger. Another alternative might be a management-led buyout of Time, sources said.

Efforts to reach a spokesman for the Robert M. Bass Group were unsuccessful, but the Bass group has not been known to work in tandem with the leveraged buyout firm of Kohlberg Kravis Roberts & Co., which recently led the $25-billion buyout of RJR Nabisco Inc.

In New York, calls to Kohlberg Kravis were referred to the public relations firm of Kekst & Co., which also happens to be working for Time Inc. Kekst’s Ruth Pachman declined comment on behalf of Kohlberg Kravis.

When asked if the public relations firm was posed with a potential conflict, Pachman replied: “When and if there’s something substantive, we’ll deal with it at that time.”

On the New York Stock Exchange, Paramount shares closed Monday at $57, off $1.875. More than 2.8 million shares changed hands, making Paramount the second most active issue on the exchange. Warner, the fourth most active issue with more than 1.9 million shares traded, closed at $54.50, down $1.625.