Firm Mum on Board Action but Plans an Announcement : Warner Reportedly OKs Chappell Deal

Warner Communications’ bid to acquire Chappell & Co., one of the world’s largest music publishers, was approved Tuesday by Warner directors, sources said.

But Warner spokesman Geoffrey W. Holmes declined to comment, saying only that the New York-based entertainment company expects to make an announcement today.

If completed, the deal would result in a merger of two of the three largest music publishing companies in the United States. (The third is SBK Entertainment World, formerly CBS Songs.)

The merger would also be subject to scrutiny by federal antitrust agencies, sources agreed.

As reported, Warner expects to pay about $200 million for Chappell, which began as a London piano maker in 1811.

More than half the acquisition sum--or about $120 million--is debt that Warner has agreed to assume from the sellers, two sources said Tuesday.

Warner will pay the remaining sum in preferred Warner shares “and/or marketable securities,” and a lesser amount in cash, one source said, predicting that the deal would result in “an insignificant amount of dilution” for other shareholders.

Chappell was sold for about $100 million just three years ago, when an investor group led by Wertheim & Co. of New York acquired the firm from Polygram, one of the world’s leading recorded music companies.

The acquisition would be the largest made by Warner since 1981, when it bought Franklin Mint for about $225 million.

Franklin Mint was sold four years later, however, when Warner was troubled by some large losses in its video game and computer business.

Since then, Warner has concentrated on its filmed entertainment, music and publishing operations.

Among other actions, the Warner board scheduled the company’s annual shareholder meeting for June 24 in New York, Holmes said.