MCA Pulling the Shade on Talks to Help Keep Matsushita at the Table
A Matsushita Electric Industrial Co. official, asked last week whether his company was mimicking its smaller rival Sony Corp. with a possible bid to buy entertainment conglomerate MCA Inc., replied simply: “The big tree catches the wind.”
With just such deliberateness, giant Matsushita now appears to be closing in on direct negotiations to acquire MCA for as much as $8.7 billion. But some individuals familiar with the discussions believe that the Japanese executives’ distaste for the hoopla that typically surrounds such mega-deals in the United States could become an impediment in the talks.
“If they get upset and go away, the game stops,” one person involved with the talks said Tuesday.
To avoid any such reaction by their negotiating partners--and to dodge the spotlight of an inquiring press corps--MCA officers in the past two days have altered travel plans and sharply restricted the number of individuals with access to firsthand information about their intentions.
“They’re closing the loop,” said one person among several who have been told that MCA’s top officers were tightening security largely to defuse the skittishness of the publicity-shy Japanese.
“Japanese companies are terrified of the U.S. press,” said another person who frequently works with Japanese corporations. “They worry about causing a scandal by selecting the wrong words, or through an incorrect interpretation of what they’ve said. Plus, they don’t understand the rules. It’s a different culture. It’s fraught with risk.”
MCA Chairman Lew R. Wasserman and President Sidney J. Sheinberg had been scheduled to begin face-to-face talks with their counterparts from Matsushita in New York as early as this weekend.
Talks between the companies remain a virtual certainty, although individuals close to the deal said their timing and location may be shifted in an attempt to diminish attention from the press and a market that has been hungering for the sort of action that, for instance, an alternative bid for MCA might bring.
Matsushita President Akio Tanii is not expected in New York this weekend, one individual familiar with the talks said.
MCA stock closed Tuesday at $59.625, up 12.5 cents, in New York Stock Exchange composite trading, as investors tried to second-guess the intentions of MCA and Matsushita officials. Matsushita’s American Depositary Receipts closed at $138.50, up $6.50, having risen sharply in the last two days as the Tokyo stock market caught fire.
Several executives who have dealt closely with Japanese companies say Matsushita--unlike Sony, which bought Columbia Pictures Entertainment for $3.4 billion last year--is especially fearful about its image in the United States. “Remember, this is an Osaka company. It isn’t even based in Tokyo,” one individual familiar with the talks said.
Another individual familiar with Japanese business said the talks have been slowed by Matsushita’s insistence that all negotiations be conducted by its headquarters officers, rather than entrusting talks, so far, to American-based executives.
People familiar with the Japanese electronics giant said it’s doubtful that discussions will proceed very quickly. “The Japanese in general are very comfortable with slowing the pace of decision making, and that is definitely a trait of Matsushita,” said one American executive.
Although Japanese executives may be accustomed to proceeding slowly in discussing mergers, some MCA insiders are said to fear that a long delay in the talks might allow time for political opposition to build against another big Japanese acquisition.
Rep. Edward J. Markey (D-Mass.), chairman of the House telecommunications and finance subcommittee, has already criticized the deal as counterproductive to American interests. Others in Washington have remained silent, saying it’s too early to speculate on where the talks will lead. Members of the Southern California delegation, in particular, have refused to say anything.
Matsushita and its adviser Michael Ovitz gave a small indication of their seriousness in recent days by retaining New York public relations firm Adams & Reinhardt to represent them in the deal. Jonathan Reinhardt, co-owner of the firm, confirmed the relationship but declined to discuss the talks.
Lawyers from Simpson, Thacher & Bartlett and investment bankers from Allen & Co. have also been retained to advise Matsushita.
Michael Cieply reported from New York, and Alan Citron reported from Los Angeles.
