Viacom revises bid for Spelling stock

First offer far below expected price

NEW YORK — Viacom’s revised offer of $9.75 a share for the outstanding 20% of Spelling Entertainment stock was $1 per share below the price Spelling’s independent directors wanted, Viacom has revealed.

Viacom raised its bid from $9 a share to $9.75 last week and began a tender offer for the outstanding 20% last Friday, a bid that will cost $250 million (including payment for outstanding options), according to tender documents.

Viacom was initially willing to raise its offer only by a quarter to $9.25 a share, the SEC filing revealed. But that price was deemed inadequate by John Muething, who headed up the special committee of independent directors (the other member was Bill Haber).

The bargaining resulted in Viacom lifting its price to $9.75 a share, increasing the cost of the bid by $18.7 million. Resisting the extra dollar a share saved Viacom about $25 million.

The SEC filing that revealed the bid late Friday also confirmed speculation that Viacom tried again last year to sell Spelling, after an unsuccessful effort in 1995. It said Viacom “had preliminary discussions” with an unidentified entertainment company with “significant television production assets” in which the potential buyer proposed to swap its TV assets for stock in Spelling.

But the proposal did not include a buyout of the public shareholders and the two sides could not agree on the value of the assets to be sold into Spelling, according to the filing.