NEW YORK — Billionaire investor and Univision chairman Jerry Perenchio emerged Thursday as the leader of the third group vying to purchase Polygram.
At the same time, Philips Electronics and Seagram Co. Ltd. finally confirmed that Seagram was indeed negotiating to buy the Philips-controlled company, sending Polygram’s stock jumping $3.31 to $56.31.
The Perenchio group does not involve Univision, but reportedly is backed by leveraged buyout firm Texas Pacific and investment bank Donaldson Lufkin Jenrette.
The group is in addition to one put together by former Creative Artists Agency chairman Michael Ovitz, involving buyout firms Forstmann Little and Thomas H. Lee & Co., which is also exploring a bid for Polygram.
Perenchio’s involvement is significant because he is known to be very close to Polygram CEO Alain Levy. Sources say Perenchio has helped Levy negotiate acquisitions in the past. Perenchio is believed to have been an adviser to Polygram on its unsuccessful bid for MGM in 1996, sources said.
Perenchio’s interest in Polygram is likely to be in support of Levy, ensuring he stays in control. Ovitz, for his part, is also said to be friendly to Levy.
Levy has met with reps from both the Ovitz and the Perenchio groups in the past day or two, sources said Thursday, as part of an effort approved by Philips to ensure all potential bidders have access to as much information as possible. Polygram has also given the groups access to financial information.
Nevertheless, neither of the LBO-backed groups is likely to make a decision about proceeding with an offer for at least 24 hours and probably a couple of days. Meanwhile, Seagram is edging closer to wrapping up its deal.
In their joint statement, issued by Philips in Amsterdam and Seagram in New York, the companies pointedly noted that the transaction being discussed included “an offer to the minority shareholders,” ensuring that Seagram will bid for the entire company. The statement was interpreted by some on Wall Street as a sign that the deal was almost done.
Polygram invited to join
Seagram and Philips said “discussions are continuing and the parties are now inviting Polygram to participate in the discussions. No assurance can be provided, however, that agreement can be reached.” Neither Seagram nor Polygram would comment, and Philips did not return calls.
Polygram’s board hired Lazard Freres LLC as an adviser earlier this week. Polygram’s directors have a legal duty to make sure all shareholders get treated fairly, an agenda different from the one at Philips, which is looking to sell its interest.
Seagram has been in talks with Philips for several weeks, prompting the Dutch electronics conglomerate to announce last week that it was reviewing its “strategic options” toward its 75% stake in the music and film giant in the hope of drawing in other possible buyers.
But while Seagram is still favored to end up with Polygram, the entry of the Ovitz and Perenchio groups is likely to raise the price Seagram has to pay to get Polygram. Polygram’s market price, which jumped 19% after the Seagram talks were disclosed, has jumped another 9% since news of potential rival bidders has broken. Polygram’s market price is now $10.1 billion, ensuring Seagram will have to pay at least $11 billion.
The LBO groups have plenty of obstacles to overcome if they are to beat out Seagram. Sources close to two of the LBO firms noted that they typically proceed with one deal out of hundreds examined.