CBS Inc. said yesterday that Loews Corp. will increase its stake in the company from 11 percent to 25 percent, a move designed to stabilize CBS and make the company less vulnerable to a hostile takeover attempt.
In an announcement made after the stock market closed yesterday, CBS said it supports the new Loews investment and will nominate Loews Chairman Laurence A. Tisch to its board of directors next month. Loews, a New York-based $5.6 billion company with interests in tobacco, hotels, financial services, insurance and Bulova watches, began acquiring CBS shares and having conversations with the company after CBS became the target of a hostile takeover bid earlier this year from Atlanta broadcaster Ted Turner.
Even though CBS defeated Turner's takeover bid by adding hundreds of millions of dollars of debt to its books, the company has continued to be mentioned by some Wall Street speculators as a possible takeover candidate. By placing a quarter of the company's stock with Loews, CBS will be able to defend itself more easily against future unsolicited buyout bids.
"Laurence Tisch has a well-deserved reputation as a successful long-term investor in publicly held companies, and we welcome him to the CBS board," CBS Chairman Thomas H. Wyman said yesterday.
"We couldn't be more pleased, and we welcome having this percentage of our stock in such friendly hands," said CBS Vice President William Lilley III. "Loews' intenton is to increase its stake in CBS for investment purposes only, and Mr. Tisch has been invited on the board under that understanding. Mr. Tisch is a quality person, not a liquidator or a raider."
In a prepared statement, Tisch said: "We look forward to being associated with a company that has such a distinguished history of public service in providing information, education and entertainment to the American people. This investment reflects our confidence in the management of CBS and in the company's ability to maintain and enhance its leadership in the broadcasting, records and publishing fields."
Tisch has a reputation as one of the nation's most prominent investors and deal makers. He has been a director of and key negotiator for companies involved in multibillion-dollar mergers, including Getty Oil Co. Tisch and his brother Preston share a fortune exceeding $1.7 billion, according to Forbes magazine.
CBS had taken several steps prior to yesterday's announcement to ensure that it will not become the target of a hostile takeover bid. Several of those antitakeover maneuvers have included asking "friendly" investors to buy major stakes in the company.
As part of its program to defeat Turner's hostile takeover bid, CBS sold a total of $125 million of preferred stock to Prudential Insurance Co., Raytheon Financial Corp., Northwestern Mutual Life Insurance Co. and American International Group Inc. The stock included provisions restricting the amount of debt CBS can have on its books, making it almost impossible for a highly leveraged takeover bid that does not have the support of the company to succeed.
As part of its strategy to increase productivity, boost its stock price and make itself less vulnerable to a takeover, CBS recently announced several steps designed to increase earnings. These plans include reducing employment by about 2,000, selling assets sufficient to generate $300 million in after-tax proceeds and reducing corporate overhead expenses by at least $20 million a year by the end of 1987.