SEAGRAM TO BUY 80% OF MCA FOR $5.7 BILLION; MATSUSHITA TO REMAIN AS MINORITY PARTNER.
Matsushita will retain a 20 percent interest in MCA. The transaction, which is expected to close in June, values MCA at $7.13 billion which represents a multiple of nearly 1.5 times 1994 revenues and approximately 15 times estimated 1994 earnings before interest, taxes, depreciation and amortization (EBITDA).
The agreement was signed by Yoichi Morishita, president of Matsushita, and Edgar Bronfman, Jr., president and chief executive officer of Seagram, upon approval by the boards of directors of both companies.
MCA's principal assets include Universal Pictures, MCA Television Group, MCA Music Entertainment Group, Putnam Publishing Group, Universal Studios theme park in Hollywood and a half interest in the Universal Studios theme park in Florida, and interests of approximately 50 percent in USA Network and over 40 percent in the Cineplex Odeon chain of theaters.
Universal's motion picture hits include "Jurassic Park," "The Flintstones," "Scent of a Woman" and "Schindler's List." MCA's music properties own the rights to over 150,000 songs and feature many of the greatest recording artists in the world. Its television companies are leading suppliers of prime time network programming, including "Murder She Wrote." Authors published by MCA companies include Tom Clancy, Robin Cook and Dean Koontz.
MCA, which is based in Los Angeles, had estimated revenues of approximately $4.8 billion in 1994. It will be virtually free of debt when the transaction is completed. Matsushita purchased MCA in 1990 for $6.13 billion, at which time the company had debt of $1 billion.
"Our investment in MCA continues the transformation of Seagram," said Edgar Bronfman, Jr., president and chief executive officer of Seagram. "We are committed to the global consumer economy and to the ownership of leading brands and franchises within that economy. We believe that the entertainment sector has unusually high future growth and profit potential. Our investment in MCA offers us a unique opportunity to participate in that potential through control of one of the very few major content providers. MCA combines powerful brands, superior production and distribution capability, and very capable people. Seagram is a conservative, long-term investor. Our 14-year investment in DuPont produced good returns for Seagram; we believe MCA provides our shareholders with superior prospects for the decades to come."
"We're honored to be entering into this partnership with Matsushita, an outstanding multi-national company driven by an enduring vision of enriching people's lives and culture," Mr. Bronfman continued. "We expect Matsushita to continue to make important contributions to MCA's future through its ownership interest and its representation on the MCA board of directors."
"I want to express my respect and admiration to Lew Wasserman, one of MCA's founders, and his long-time colleague Sidney Sheinberg," Mr. Bronfman said. "Without them, the MCA we value so highly would simply not exist. I look forward to working with them to shape the future direction of MCA."
Yoichi Morishita, president of Matsushita said, "We are very pleased with our new majority partner and with the speed, trust and mutual confidence that characterized the negotiations." Mr. Morishita further said, "The entertainment industry is a very important part of the American economy and we expect MCA will continue to play a leading role, not only in the U.S., but throughout the world. Seagram also shares Matsushita's corporate philosophy of quality, customer satisfaction and social responsibility. We believe our partnership will take MCA to a greater success in the years ahead."
"MCA has grown during the five years of our ownership, and together we have contributed to the significant advancement of digital video standards," Mr. Morishita continued. "But the core business of Matsushita is electronics, which is undergoing a major change as the multimedia age approaches with the advancement of digital communications technologies on a global scale. This transaction positions us to deploy our resources in such growth areas as multimedia and key device technologies and global business expansion, while continuing to participate in the entertainment business through our retained interest in MCA. We look forward to the continuing contribution of our business and technological expertise to MCA."
Seagram said financing for the transaction would be provided by a portion of the $7.7 billion net after tax proceeds of the recent redemption of Seagram's shares of DuPont.
Seagram, headquartered in Montreal, is a leading global producer and marketer of distilled spirits, wines, fruit juices, coolers and mixers and sells its brands in more than 150 countries and territories. Affiliates and joint ventures in 41 countries and territories comprise the largest distribution system in the spirits and wine industry. Seagram manages its worldwide beverage operations through two major business units -- The Seagram Spirits And Wine Group and The Seagram Beverage Group -- and two U.S.-based specialized, premium wine operations, The Seagram Classics Wine Company and Seagram Chateau & Estate Wines Company. Its consumer brands include Chivas Regal, Royal Salute and The Glenlivet Scotch Whiskies, Crown Royal and Seagram's V.O. Canadian Whiskies, Seagram's 7 Crown Blended Whiskey, Four Roses Bourbon, Seagram's Extra Dry Gin, Martell Cognacs, Mumm and Perrier Jouet Champagnes, Sandeman Ports and Sherries, Sterling Vineyards and Barton & Guestier Wines. Seagram also distributes Absolut Vodka in many world markets.
Matsushita, founded in 1918 by Konosuke Matsushita, is one of the world's leading manufacturers of consumer and industrial electronic and electric products, which it markets under the Panasonic, Technics, Quasar and National brand names. Based in Osaka, the company employs more than 250,000 people worldwide and markets its products in more than 160 countries. During the fiscal year ended March 31, 1994, Matsushita reported worldwide revenues of $64.3 billion.
Chris Tofalli, 212/572-1118
James Abernathy, 212/371-5999
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|Date:||Apr 9, 1995|
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