MCA Inc.'s stock has jumped on speculation that Japan's Matsushita Electric Industrial Co. will acquire the Universal City, Calif.-based entertainment company by the end of the year.
Officials of MCA and Matsushita are scheduled to begin meeting in New York by early next week in hopes of reaching an agreement in principle, according to reports in the Wall Street Journal and the Los Angeles Times.
Neither company would comment on the reports. An MCA official said that the company's president, Sidney Sheinberg, was scheduled to leave for New York late yesterday and that Chairman Lew Wasserman would join him today.
An agreement in principle next week would pave the way for a tender offer and antitrust approval before the end of the year.
Reports of negotiations spurred "extremely active, high-risk," trading yesterday in MCA stock, said Jessica Reif, an analyst with First Boston Corp. Ms. Reif said the trading was risky because there is no assurance the deal will go through.
She said both sides have clamped such a tight lid on information about their merger talks that any news prompts heavy trading in MCA.
MCA's stock closed yesterday at $65.50, up $3 on volume of 1.4 million shares, compared with 451,000 the day before.
"The interpretation on Wall Street obviously is that the deal is still on and negotiations are about to get hot and heavy," said Ed Antoian, an analyst at Delaware Management Co. in Philadelphia.
Mr. Antoian said that closing the deal before the end of the year "makes a lot of sense" for the companies because it would shave capital gains taxes for MCA shareholders.
In September, officials from both companies confirmed buyout talks. MCA is said to be seeking $80 to $90 a share, which would mean a purchase price of $7.3 billion to $8.3 billion.
Matsushita, however, reportedly wants a $60-to-$70-a-share deal.
Besides price, other negotiable terms include MCA assets that Matsushita either cannot or will not seek to own, including WWOR-TV in New Jersey and the Yosemite Park and Curry Co.
Matsushita would be prohibited from owning WWOR because of federal regulations against foreign ownership of U.S. television outlets.
Matsushita is thought to be interested in completing the deal before Congress reconvenes because it is concerned about political objections to Japanese ownership of MCA.