Seagram Co. continued yesterday to move quickly toward buying control of MCA Inc. amid growing confusion over whether the widely reported $7 billion price tag for 80 percent of the company was overstated by as much as $1.4 billion.
Sources close to the deal, expected to be announced as early as tomorrow, said that the reported price leaked out Thursday was too high, and that Seagram would actually be paying only $5.6 billion.
On Thursday, sources close to the situation had said that $7 billion was the price being paid for the 80 percent stake, which would put MCA's total value at close to $9 billion.
The shifting price information followed a public skewering in yesterday's financial press of Seagram Chief Executive Edgar M. Bronfman, who was widely characterized as a star-struck executive overpaying for his ticket into Hollywood.
Seagram on Thursday sold 156 million shares of DuPont stock -- which had been a highly lucrative investment -- for $8.8 billion, which is expected to help the company pay for MCA. Seagram's stock continued to tumble yesterday in reaction to the reports of the DuPont sale and the possible MCA purchase. Since Seagram closed at a 1995 peak of $32.25 on March 30, Seagram's stock has lost $5.75, or 17.9 percent of its value, closing yesterday at $26.50, down $1.375 for the day.
Evidently seeking to defuse Wall Street criticism of the sale of the DuPont stake, Mr. Bronfman told securities analysts in a conference call yesterday that Seagram had concluded that the potential of future gains from DuPont were less than what it could earn by "more active management of the money," in the words of Rich Morrow, an analyst for BBN James Capel Securities in Toronto who participated in the call.
Mr. Bronfman firmly turned away all questions relating to MCA, Mr. Morrow said.
Both Matsushita and Seagram for the first time yesterday confirmed publicly that they are in discussions about Seagram buying control of MCA. The two sides cautioned that final details, including price, were still being worked on, although sources said that they do not expect any major hurdles.
The two sides had previously stonewalled Wall Street, the financial press and regulators. Canadian stock regulators and Toronto Stock Exchange officials said they plan to investigate Seagram Co.'s disclosure practices. Seagram's parent is based in Montreal.