RUMORS BOOSTING SEAGRAM; ACQUISITION OF EMI SAID TO BE PLANNED.

Byline: Dave McNary Daily News Staff Writer

The rumor mill kicked into overdrive Thursday and pushed stock of Seagram Co., parent of Universal Studios, to an all-time high on speculation that it plans a huge additional investment in its entertainment division.

Seagram shares hit 43-3/8 before closing at 42 11/16 for a gain of 1-1/8. That followed Wednesday's increase of 1 11/16, with the back-to-back gains pulling Seagram past its previous high close of 42-1/2, which came 15 months ago.

Thursday's run-up came after The Wall Street Journal reported Seagram chief executive Edgar Bronfman Jr. is considering buying British music giant EMI - owner of the Capitol and Virgin labels - and boosting spending on theme parks and foreign TV operations.

EMI would expand significantly Universal's music operations in international markets. The newspaper said unnamed sources believe Seagram may finance a deal by selling its Tropicana juice business, which analyst David McFagden of Griffiths McBurney Partners estimated would fetch $3 billion.

``The price gain in the stock is purely speculative, based on a lot of rumors floating around,'' McFagden said. ``I would be very surprised if Seagram made a bid for EMI.''

David Leibowitz, managing director at Burnham Securities, said it's difficult for trackers to tell what will happen with Seagram. ``There's nothing mysterious about the stock going up, but it's very premature to say what the company is going to do,'' he added.

Several other developments have fueled the speculative fire:

Thursday's announcement by EMI that it had been approached with a possible buyout offer from an unnamed bidder, leading to a 20 percent rise in EMI shares on the London exchange. Rumored potential buyers include Seagram, financier Kirk Kerkorian and Burbank-based Walt Disney Co. The price tag for EMI, which has a current market capitalization of $8 billion, would be as much as $10 billion.

Salomon Smith Barney analyst Jill Krutick said Disney is unlikely to make such a deal despite lackluster performance in its own music operations. She noted that Disney boss Michael Eisner recently denied such a move would occur.

Recent comments by analysts that Seagram, after completing such a deal, could split the liquor and entertainment businesses. The combined value of the new stocks would likely be higher than Wall Street's current price for Seagram.

Newspaper reports that Bronfman planned to meet EMI executives in London this week.

An upbeat cover story in this week's Barron's on Bronfman, who has been widely criticized for Seagram's lagging stock price since it bought Universal in 1995. Several analysts told the newspaper they expect significantly improved financial performance in coming years, and one major shareholder said the stock could be worth 70 a share.

Recent reaction by Wall Street to other Seagram rumors. On April 17, it gained 2-5/8 to 40-1/2 after a management shake-up in film operations, leading to speculation that a major player like Barry Diller or Steven Spielberg would take over Universal.

Montreal-based Seagram, which is 34 percent owned by Bronfman's family, has not commented on the rumors. But Leibowitz said he expects concrete news to develop eventually.

``Clearly, there are changes under way, and the situation will very likely be well-explained,'' he said.