Davis May Withdraw CBS Bid; Rejection Appears Set

Sources close to Marvin Davis, the Denver oilman and former chairman of 20th Century Fox, said Wednesday that he will likely withdraw his proposal to buy CBS Inc. unless some of the network’s major shareholders or directors ask its management to reconsider its out-of-hand rejection.

For their part, CBS sources said the rejection issued verbally and by letter by CBS Chairman Thomas H. Wyman already had the backing of the company’s major owners and directors. No shareholders have called CBS headquarters in anger over the summary rejection, a company spokesman said.

Davis and CBS disclosed Tuesday that CBS had rejected his proposal for a buy-out of the network at $160 per share, or $3.75 billion, after Davis and Wyman had two face-to-face meetings this month in Wyman’s headquarters office here. Davis later reiterated his proposal in a letter, and Wyman replied in kind on Tuesday. “We expect that the Wyman letter is the end of the matter,” CBS spokesman William Lilley III said.

CBS shares closed at $145, down $2, in trading Wednesday on the New York Stock Exchange.

Wall Street professionals considered Davis’ proposal to be inadequately priced at best. CBS has a breakup value estimated at more than $200 per share, securities analysts say.

Davis made his initial proposal for a buy-out at $150 per share in early March, when CBS stock was already selling for about $141. That would have been a meager premium for a takeover of such magnitude, analysts said.

Furthermore, in today’s overheated stock market, CBS stock may very well outstrip on its own even Davis’ later $160 price.