Jaws Tries to Swallow Coke?

MCA bids for big bottler

Through its recording and Universal film subsidiaries, MCA Inc. has produced some of television's more violent programs (Baretta, Kojak), some very slick and successful flicks (The Sting and, above all, Jaws) and a stack of million-selling gold records, by Elton John and Olivia Newton-John among others. But entertainment alone has not satiated MCA's voracious appetite for acquisition. It also has pushed into computer services, retail gift stores, publishing (Putnam) and finance (Colorado's Columbia Savings and Loan). Last week MCA decided that all these things would go better with Coke. It offered $30 each for all the common shares of Coca-Cola Bottling Co. of Los Angeles. Total price: $140 million.

That was not enough for CCLA managers, who denounced the MCA offer to shareholders as "not being representative of the inherent worth of your company." Coke-L.A., they pointed out, is about to wrap up a deal of its own to acquire Coca-Cola Bottling Co. of Mid-America. That would extend CCLA's marketing turf from Hawaii and the West Coast eastward. Both companies, like about 500 other Coke bottlers, are independent of the monster Coca-Cola Co. of Atlanta, which supplies bottlers for a fee with Coke syrup and rights to the trademark. The bottlers do not have to confine themselves to Coke: CCLA, for example, also bottles Canada Dry and Dr Pepper soft drinks.

MCA's timing especially annoyed CCLA brass: the offer came before Coke-L.A. could release its third-quarter sales and earnings figures. These are usually the year's fattest because of summer soft-drink consumption. CCLA's sales last year were $165 million, v. $141 million in 1975; earnings rose to $11 million from $9 million. Coke-L.A. even filed suit to stop the takeover bid, charging that it was illegal because MCA began buying shares of CCLA before filing appropriate documents with the U.S. Securities and Exchange Commission. Trading in CCLA was indeed furious: through the last six trading days, more than 25% of the 4.3 million outstanding shares changed hands, and the price in the over-the-counter market jumped from $22 to $33.50. Most of the buying came from arbitragers, or professional traders (TIME, Oct. 17), who scented a bidding war.

MCA, which last year earned a $90 million profit on revenues of $803 million, seems determined to make what it sees as a good investment. MCA is loaded with extra cash--$153 million in all--and needs a place to put it. Coke-L.A. shareholders have until the end of this week to decide whether to take MCA's offer. If they do, the acquisition will move the movie business toward controlling not only what audiences see but what they buy in the lobby. Twentieth Century-Fox has taken over Coca-Cola Bottling Co. Midwest in St. Paul, and General Cinema bottles Pepsi and Seven-Up.

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