Sayonara, Itochu
Japanese giant sells its stake in TW
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Morgan Stanley Dean Witter handled a block trade of 12 million shares, Itochu's remaining shares, at a price believed to be $63.25 a share. Wall Streeters said the price of the deal was a surprisingly small discount to TW's closing price of $64.25.
Time Warner bought 1 million shares of the block under its recently expanded $5 billion stock buyback program, a spokesman for TW said. He added the purchase "reflects Time Warner's confidence in the future price of its stock."
Itochu and another Japanese electronics concern, Toshiba, jointly invested $1 billion in Time Warner in 1991 when they bought 12.5% of the newly formed Time Warner Entertainment. Their stakes were converted to stock in Time Warner itself in 1995.
In March last year, as Time Warner stock was rallying strongly, both companies sold a portion of their stake. Itochu sold more in September last year, and Toshiba sold almost all of its remaining stake in October. Toshiba retains a few hundred thousand shares, sources said.
Time Warner's stock has more than doubled in the past year, reflecting rising confidence among investors in the company's prospects. The company has overhauled its balance sheet, improved its credit rating and last week announced plans to dramatically expand its stock buyback program.
TW stock was particularly strong Thursday, closing up $1.87, in the wake of the Federal Communications Commission's statement that it would not take a stance yet on whether cable operators should be required to open their systems to Internet access providers such as America Online.
Cablers such as Time Warner and TCI are already offering Internet services through their own companies and objected to having to make their systems available to rivals. AT&T had said such a ruling could have jeopardised its takeover of TCI. TCI stock rose $4.50 to $67.68 Thursday.
