Harcourt Brace Suitor Backs Out of Deal

General Cinema Corp. on Friday terminated a tentative deal to buy the publisher Harcourt Brace Jovanovich Inc. for more than $1.4 billion in cash after failing to strike a deal with the publisher’s bondholders.

General Cinema, after hitting an impasse with Harcourt’s bondholders, opted to let its bond purchase offers expire, said Richard Smith, chairman and chief executive.

Harcourt has been struggling with almost $2 billion it took on in 1987 to thwart a 1987 takeover bid by London-based publisher Robert Maxwell.

Harcourt put itself on the auction block last fall.

The Orlando, Fla.-based textbook publisher reached a merger agreement with General Cinema early this year, but the merger depended on at least 90% of Harcourt’s bonds being exchanged for cash.

“Despite our concerted efforts over the past two months to negotiate in good faith with bondholders, certain significant holders continue to make demands, which we believe ignore the economic realities of this transaction,” Smith said.

“In view of this impasse, we have decided that it is in the best interests of General Cinema and our shareholders to allow the bond tender offers to expire,” he said.

General Cinema, based in Chestnut Hill, Mass., is a major operator of movie theaters and owns 60% of retailer Neiman Marcus Group.

General Cinema’s offers to various classes of bondholders expired at 5 p.m. Thursday. The offers had been extended numerous times since the initial launch Feb. 14.

Harcourt expressed dismay over the move.