RCA Corp. Chairman Thornton F. Bradshaw said yesterday that the decision by the RCA board of directors to sell the company to General Electric Co. was "made solely on the objective determination" that the merger is in the best interests of RCA shareholders.
Some Wall Street analysts and major RCA stockholders have argued that RCA may be worth more than the $66.50 a share -- a total of $6.28 billion -- that GE has agreed to pay.
An article in yesterday's editions of The Washington Post said that Bradshaw had acknowledged that he did not get the highest possible price for RCA.
Bradshaw was quoted in the article as saying that he was determined not to see RCA broken up by selling the various subsidiaries to the highest bidders.
Some analysts have argued that this would be the best way to maximize value for RCA shareholders. Bradshaw also was quoted as saying he considered other constituencies, besides shareholders, in agreeing to sell RCA to GE last week. In a statement issued yesterday, Bradshaw said:
"The Washington Post correctly quoted me this morning as saying that, in addition to the shareholders, a number of other constituencies -- employes, communities and the United States as an economic competitor -- had to be considered in the deliberations leading to the merger of RCA and GE.
"However, after full attention to those considerations, the final decision of the board of directors of RCA was made solely on the objective determination that this merger is in the best interests of the shareholders, and it is fully and fairly priced," Bradshaw said.
"In fact, RCA and its outside financial experts had analyzed the breakup value of RCA prior to the GE offer and had put it in the precise range of the final $66.50-a-share price. A few analysts put the breakup value higher, but their estimates were based on erroneous assumptions," he said.
Breakup value refers to the total value that could have been obtained for RCA stockholders by selling RCA's various businesses to the highest individual bidders.
Some Wall Street experts believe a higher price could have been achieved for RCA by putting the entire company up for auction to the highest bidder.
However, knowledgeable Wall Street sources said that RCA decided not to put the company up for auction, or to solicit any other offers, because RCA was concerned that GE might withdraw its bid if RCA did so.
Mesa Petroleum Chairman T. Boone Pickens Jr., an advocate of shareholder rights, believes that Bradshaw's sole responsibility in the takeover is to maximize value for RCA's shareholders.
Pickens said he believes RCA agreed to sell the company for far less than its underlying value.
In a related matter, an RCA spokesman said yesterday that provisions of the agreement between the companies give GE the option to break the merger pact if government regulators do not allow GE to acquire RCA's NBC subsidiary or aerospace and defense business.