McCaw Suspends Talks on Lin Deal

McCaw Cellular Communications suspended negotiations Friday on acquiring Lin Broadcasting in a cash and stock transaction, triggering a fall in Lin’s stock as doubts spread about McCaw’s plans.

In heavy over-the-counter trading, Lin fell $2.875 a share to close at $109.625.

McCaw raised hopes last week that it might acquire the New York-based cellular telephone and broadcasting concern for about $6.1 billion when it agreed to discuss an offer of $110 a share in cash and up to $17.50 in stock.

But McCaw said talks were suspended because it has been unable to resolve “several significant issues” in discussions with Lin. Among issues requiring further study, McCaw cited a recent congressional tax proposal and other legislative matters that could affect the value of its offer.

Kirkland, Wash.-based McCaw opened discussions after Lin rejected two lower offers. On Friday, McCaw extended until Aug. 11 the only bona fide bid on the table--a $110-a-share, or $5.3-billion, all-cash tender offer. McCaw had reduced its $120-a-share bid made in June after Lin lost the chance to acquire valuable cellular properties in New York and Philadelphia.

A McCaw spokesman said he couldn’t elaborate on the suspension of talks. In a statement, Lin said it was surprised by McCaw’s announcement, particularly since the substance of the legislative proposals “had been known for weeks.”

Lin, which holds a 35% stake in Los Angeles Cellular Telephone, said, “the suspension of negotiations by McCaw under the circumstances raises questions about McCaw’s ability and commitment to promptly proceed with any transaction to acquire Lin.”