Davis Says CBS Rejected ‘Friendly’ Bid : Spokesman Won’t Say If Group Will Hike $3.75-Billion Offer

Marvin Davis, Denver oilman and former owner of 20th Century Fox Film Corp., said through a spokesman Tuesday that he and unnamed associates had made a “friendly,” $160-a-share offer to buy CBS but were turned down.

In response to questions, Davis spokesman James Fingeroth in New York added that “we aren’t saying” whether the oilman intends to make a higher offer for the giant broadcasting firm.

Fingeroth declined to identify Davis’ associates in making the $3.75-billion offer. However, he “categorically denied” reports circulating in the financial community that Metromedia Chairman John Kluge or Laurence A. Tisch, chairman and chief executive of Loews Corp., were among them. Tisch became an influential member of CBS’ board last October after his company acquired about 11% of CBS. Kluge has overseen the sale of most of Metromedia’s broadcast properties.

On Oilman’s Behalf

After initially fending off inquiries about a rumored Davis bid, Fingeroth issued the following statement in the oil baron’s name late Tuesday:

“After careful study, we determined to submit an offer to acquire all of the shares of CBS Inc. for cash at $160 per share. We conveyed our offer to the company’s management, both verbally and in writing.

“We told CBS that our offer was not subject to financing and that we intended to retain current management following the acquisition. We also told CBS we would only proceed on a friendly, negotiated basis. Today we received a letter from CBS rejecting our offer and stating company’s desire to remain independent.”

Davis himself, said to be at his Los Angeles home, could not be reached for further comment. The oilman sold his stake in Fox to newspaper publisher Rupert Murdoch last year.

For its part, CBS issued a statement Tuesday saying flatly that it is not engaged in any negotiations regarding control or ownership. Thomas H. Wyman, its chairman and chief executive, added: “Our view today is no different than it was in 1985. We intend to pursue our objectives as an independent company.”

Sources close to the broadcasting firm, which last year successfully fought off a takeover attempt by Atlanta cable entrepreneur Ted Turner, said late Tuesday that Wyman had met three times this month with Davis.

Wyman had agreed to meet with Davis, the sources said, because CBS and Fox, under Davis’ ownership, had a joint venture in the home video business. The sources said that at the first meeting, sometime in the first week of March, Davis made an “overture” to buy CBS in a cash purchase at $150 per share. CBS stock at that time was selling for about $141. Wyman is reported to have rejected the bid outright. At a second meeting about a week later, Davis increased the price to $160, but Wyman again rejected it and reiterated the company’s desire to remain independent.

Last week, the sources said, a formal offer at $160 per share was made in a letter to Wyman. That was officially rejected Tuesday in a letter to Davis that contained much the same language as that used in the broadcaster’s public statement.

The sources said one reason that CBS flatly rejected the Davis offer was because it “amounted to an attempt to take the company private essentially at the current market price.”

Reports Circulating

Rumors of a potential Davis bid for CBS have been circulating on Wall Street for at least a week. On Tuesday, before the Davis offer was confirmed, trading in the shares was relatively modest. The stock closed at $147, up $1, on volume of 379,900 shares, after having reached as high as $151.50. Trading dropped off sharply in the final hours of the day and the stock price sank.

On Monday, CBS rose $5.75, apparently on the strength of an interview in USA Today with Preston R. Tisch--Laurence Tisch’s brother, president of Loews Corp. and a major CBS shareholder--suggesting that Loews was interested in acquiring the company. Tisch later tried to retract his statement in a further interview with the newspaper.

Analysts also expressed skepticism that Loews, if genuinely interested in taking over CBS, would air its plans in a way that would boost the stock price and make an acquisition more expensive.

CBS and Loews have an agreement allowing Loews to increase its stake in the network to 25%, a move designed by CBS as a deterrent to other bidders. Loews has bought sparingly, however; after the agreement was reached in November, when the company owned less than 12% of CBS, Loews made no more purchases until February, when it acquired 96,000 shares at prices below $120. Loews now owns 12.3%, CBS says.

Most Wall Street experts were skeptical that Davis could mount a successful takeover of CBS. They noted that even at $160 per share, the bid would not be viewed as an adequate price for the company, and certainly not while the bullish stock market is driving up the prices of many blue-chip issues.

In fighting off the takeover campaign by Turner late last year, CBS changed its financial structure to make hostile acquisitions more difficult. Among other things, the company attached restrictions to its public debt, limiting its total debt-to-capital ratio to 7 to 1. Thus, any hostile bidder for the company would have to execute his deal almost entirely in cash, a task that would require billions. Davis’ ability to raise such a sum or to find financial backers to aid him is the subject of considerable debate.

Reports last year suggested that the oilman had experienced a serious cash crisis forcing him to sell the bulk of his producing petroleum properties. He also sold his 50% share of 20th Century Fox--the film studio that he had owned for four years--to Rupert Murdoch last year for $325 million. Since then, oil prices have fallen 60%.

Nonetheless, some analysts viewed the Davis bid as evidence that CBS is still vulnerable to a takeover. Its two TV network rivals, NBC and ABC, have been acquired in the past year, and CBS is still viewed as a possible target, they said. American Broadcasting Cos. merged with Capital Cities Communications last January, and RCA, parent of NBC, is merging with General Electric.

Al Delugach reported from Los Angeles and Michael A. Hiltzik from New York.