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Gulf & Western Industries Inc., currently bidding $700 million for Prentice-Hall Inc., is one of several companies that are separately evaluating whether to bid for 24 magazines owned by Ziff-Davis Publishing Co.
Meanwhile, Dillon, Read & Co., Prentice-Hall's adviser, and other investment banking concerns continued to seek a bidder to top G&W's offer for Prentice-Hall. The offer began last Wednesday. Prentice-Hall last week called G&W's $70-a-share bid inadequate and said it would seek a higher offer.
A Wall Street investment banker said, however, that Time had determined that it couldn't exceed G&W's bid. "G&W's bid makes sense only because of the fit between Simon & Schuster and Prentice-Hall," the banker said. "There isn't the same synergy between Time and Prentice-Hall." G&W owns publisher Simon & Schuster; together, Simon & Schuster and Prentice-Hall would make up the nation's largest book publisher, with wide interests in professional and consumer computer software.
NEW YORK -- Gulf & Western Industries Inc., currently bidding $700 million for Prentice-Hall Inc., is one of several companies that are separately evaluating whether to bid for 24 magazines owned by Ziff-Davis Publishing Co.
Analysts said a bid for most or all the magazines could range from $300 million to $600 million. They were put up for sale last month.
Publishing industry sources said G&W, already seeking to buy the book publisher Prentice-Hall, is one of several companies that may be interested in bidding for the Ziff-Davis magazines. Other possible buyers are said to include CBS Inc., American Broadcasting Cos., Time Inc. and Rupert Murdoch's News America Corp. None of the companies would comment.
Meanwhile, Dillon, Read & Co., Prentice-Hall's adviser, and other investment banking concerns continued to seek a bidder to top G&W's offer for Prentice-Hall. The offer began last Wednesday. Prentice-Hall last week called G&W's $70-a-share bid inadequate and said it would seek a higher offer.
G&W acknowledged that it is "looking at" the Ziff-Davis properties but declined to elaborate. Ziff-Davis, a unit of Ziff-Davis Corp., said last month that it was putting 24 consumer and business magazines up for sale. Ziff-Davis and its investment banker, Goldman, Sachs & Co., declined to comment.
Wall Street sources said that Time Inc. and Times Mirror Co. have considered bidding for Prentice-Hall. Both declined to comment. Time is said to have considered exchanging some of its stock for Prentice-Hall in an effort to bolster its own small book-publishing operations. Such a transaction also might have reduced Time's vulnerability to an unfriendly takeover. Time has been the subject of takeover speculation.
A Wall Street investment banker said, however, that Time had determined that it couldn't exceed G&W's bid. "G&W's bid makes sense only because of the fit between Simon & Schuster and Prentice-Hall," the banker said. "There isn't the same synergy between Time and Prentice-Hall." G&W owns publisher Simon & Schuster; together, Simon & Schuster and Prentice-Hall would make up the nation's largest book publisher, with wide interests in professional and consumer computer software.
Though G&W wouldn't discuss its interest in Ziff-Davis's magazines, such an acquisition would fit with plans of the chairman and chief executive officer, Martin Davis, to focus on entertainment, media and communications operations. To help digest both publishing properties, G&W could shed one of its several remaining businesses in nonmedia and entertainment markets.
The Ziff-Davis magazines that are for sale include Car and Driver, Popular Photography, Stereo Review, Travel Weekly, Business and Commerical Aviation, and World Aviation directory. While Ziff-Davis originally offered the magazines as a single property, some bidders are known to be interested only in certain magazines. Ziff-Davis's 11 computer magazines aren't for sale.
Separately, G&W said Prentice-Hall holders who tender their shares under G&W's offer will be entitled to receive the increased quarterly dividend that the publisher announced last week, without any reduction in the $70-a-share offer price. Prentice-Hall is increasing its quarterly dividend to 48 cents a share from 46 cents.
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S&P Affirms G&W Rating
NEW YORK -- Standard & Poors Corp. said it affirmed Gulf & Western Industries Inc.'s senior debt rating, while Moody's Investors Service Inc. said it is reviewing G&W's ratings.
The rating agencies acted in response to G&W's $70-a-share offer for Prentice-Hall Inc.
Standard & Poor's said G&W has the "financial resources to digest the acquisition (of Prentice-Hall) relatively quickly" although the takeover would increase G&W's debt. G&W's senior debt rating was kept at triple-B-plus.
Moody's said G&W had about $75 million in cash on hand as of its July 31 fiscal year-end; it now has the additional proceeds from the sale of food operations, Moody's said. Moody's said it would evaluate the benefits of combining Prentice-Hall and Simon & Schuster operations, and the negative implications for G&W's balance sheet leverage and fixed-charge coverages because of the short-term borrowings that will be necessary to finance the offer.
Under review by Moody's are G&W's Baa-1 senior debt rating and Baa-2 subordinated debt rating. Also under review are the Baa-1 debt ratings of G&W's Elco Corp., Kayser-Roth Corp. and G&W Intercontinental Investments N.V. subsidiaries.
G&W has said it would finance the acquisition through existing revolving credit agreements and cash from internal sources.
Credit: Staff Reporters of The Wall Street Journal
Copyright Dow Jones & Company Inc Nov 12, 1984