Negotiators Said to Be Getting Closer on Price for MCA

Top officers of Japan’s Matsushita Electric Industrial Co. and Hollywood’s MCA Inc. have narrowed their price discussions to a range that would pay MCA stockholders between $75 and $85 a share, according to people familiar with the talks.

The two sides have begun face-to-face meetings in New York and could reach a deal as early as next weekend despite continued differences over the exact buyout price, one of the people said.

A price in the reported range would point to a total payment of between $6.85 billion and $7.79 billion for MCA’s approximately 91.3 million shares, on a fully diluted basis. The price would include the value of stock in a new spinoff company that would own MCA’s New York-area TV station.

Several people familiar with the talks said MCA Chairman Lew R. Wasserman remained unlikely to make any deal for less than $80 a share, though he apparently has softened a bargaining position that sought as much as $90 a share for the entertainment conglomerate. Wasserman is said to be demanding employment guarantees of as long as five years for a wide range of MCA executives.

Matsushita, an Osaka-based consumer electronics giant, apparently has accepted a bargaining framework that would require it to pay at least $75 a share for MCA, even though the Japanese company had initially hoped to pay less.

The current meetings began with a dinner last Sunday in New York. MCA is represented by Wasserman, company President Sidney J. Sheinberg and others in the talks. Matsushita’s delegation is headed by its executive vice president, Masahiko Hirata.

Hirata was quoted in a Japanese news report late last week as having said that he and company President Akio Tanii weren’t planning to attend any bargaining session in New York. But people close to the discussions placed Hirata at the table. It remained unclear whether Tanii would join the talks.

Both companies declined formal comment on the progress of the discussions.

Under the plan being discussed in New York, MCA’s WWOR-TV station, based in Secaucus, N.J., would be spun off to shareholders to avoid delays and regulatory problems that might accompany a sale.

Under federal law, foreigners cannot own more than 20% of a broadcast station in the United States. The Federal Communications Commission would have to approve a license transfer if WWOR were sold but wouldn’t be required to act if the station were spun off to MCA shareholders.

MCA paid $387 million for the station in 1986. If the station were currently valued at roughly the same price, or about $4.25 for each share of the newly created spin-off, Matsushita would have to pay $75.75 to reach an $80 payout for MCA stockholders.

Individuals familiar with the talks have said that Yosemite Park & Curry Co., through which MCA operates concessions in Yosemite National Park, might also be disposed of separately. But returns from any such transaction would represent only a tiny fraction of the total purchase price.

In New York Stock Exchange composite trading, MCA shares rose $2.375 to close Monday at $67.25 as traders became more confident that a deal was near.

The price range of $75 to $85 per share, or $6.85 billion to $7.79 billion, for MCA appears to fall within market expectations for a buyout.

Various analysts--according to reports compiled by the Boston-based InvesText research service--have come up with values as low as $5.2 billion and as high as $7.4 billion for MCA’s assets, which include Universal Studios’ film and TV operations, the MCA Records group, theme parks in Southern California and Florida, as well as interests in book publishing, movie theaters and other areas. But virtually all have assumed that a buyer, such as Matsushita, would be forced to pay a premium for control of the entire company.

In a report dated Oct. 4, for instance, Dean Witter Reynolds Inc. estimated MCA to have asset values of between $5.2 billion and $6 billion. But Dean Witter assumed that Matsushita or any other buyer might pay as much as 30% more, or up to $7.8 billion, because of the company’s “trophy value.”

A Kidder, Peabody & Co. report dated last March, before the buyout was announced, reckoned MCA to be worth $75 a share. The report at the time called it “disconcerting” that the company had, in effect, sold 11.1% of its equity for $575 million, or about $58 a share, by issuing stock valued at that amount to music mogul David Geffen in return for his record company.

Geffen, Wasserman and various trusts over which he shares control, and mutual fund manager Capital Group Inc. of Los Angeles are MCA’s biggest shareholders.