The Los Angeles Times from Los Angeles, California • 64

BUSIN Coe Anjgclca (Times Friday, October 5, 1984 CCtPart IV National Intergroup Inc. Bass Family Buys Out Irwin Jacobs, Increases Stake in Disney to 25 A holding company that owns National Steel the seventh largest domestic producer, and First Nationwide Financial parent of First Nationwide Savings. It also owns other metals and energy businesses. Army Weighs Buying 117 York Guns May Use $800 Million of Fiscal '84 Funds, Avoiding Ban for '85 Staff Writer Year ended Dec. 31: 1983 1982 Revenues $2.99 billion $3.04 billion Earnings (loss) $(154 million) $(463 million) Shares outstanding 20.3 million 18.6 million Book value per share 43 .06 $54.03 Bergen Brunswig Corp.

Second largest drug wholesaler in the third largest supplier of medical and In 1 982, it also became a distributor products. United States and surgical equipment. of consumer electronics jijjj Si Year ended Aug. 31: 1984 1983 Revenues $1.7 billion $1.42 billion Earnings $18.3 million $18.6 million Shares outstanding 12.6 million 12.6 million Book value per share $11.11 $9.99 By KATHRYN HARRIS, Times The wealthy Bass family of Fort Worth on Thursday locked up effective control of Walt Disney Productions by buying out dissident shareholder Irwin L. Jacobs for $158 million.

The move in- -creased the Bass holdings to 25, thus eclipsing the holdings of the Disney family for the first time in the company's 61 -year history. The move came just four months after the group made its initial investment in Disney and was hailed as yet another coup for the intensely private Texas family. The Basses cemented their control "at $60 a share, not at $70, $80 or $90, which all the speculators were hoping for," said Harold Vogel, a Disney analyst at Merrill Lynch, Pierce, Fenner Smith Inc. No Consensus Sid R. Bass, president of Bass Brothers Enterprises issued a statement saying, "We intend to buy no additional shares and we have no interest in participating in the day-to-day operations of the company." There was no consensus on Wall Street or in Hollywood on the Basses' plans for the Burbank-based company.

Analysts wagered that the Basses might keep their stake in Disney for six months to more than 10 years, and they divided on the question of whether the Basses might sell the company. Investment community sources agreed strongly, however, that the Disney heirs no longer control the Bergen Brunswig to Merge With Steel Firm By TOM FURLONG, Times Staff Writer McCrory Corp. Offers to Take HRT Private By RALPH VARTABEDI AN, Times Staff Writer Bergen Brunswig Corp. and National Intergroup in a surprise announcement Thursday, said they have agreed to merge through an exchange of common stock that has a value of more than $500 million. Fast-growing Bergen Brunswig, based in Los Angeles, is the nation's second-largest drug wholesaler, while cash-rich National Intergroup, based in Pittsburgh, is the parent of company of National Steel, the country's seventh-largest steel concern.

Wall Street, caught off guard by the prospect of a union between a steel company and a health -products distribution firm, drove down the stock prices of both companies on heavy volume. "I was speechless when I first heard the news," said Joel Liffman, an analyst for Drexel Burnham Lambert. Bergen Brunswig's shares fell from $22 to $20,875 while National Intergroup's stock dropped from $28 to $27. As a result, the value of the deal fell from $546 million to $519 million. As the deal is structured, each National Intergroup stockholderthe company has 20.3 million outstanding shares will receive 1.225 shares of Bergen Brunswig Class A common stock for each National Intergroup share.

Nation studio founded by Walt and Roy O. Disney in 1923. Walt Disney's widow and two daughters own an estimated 7.5, while the family of Roy E. Disney, the only child of Roy O. Disney, controls about 5.2.

"Roy Disney has been outfoxed, and so has the whole family. They've effectively lost control of their baby," one securities analyst said, asking not to be identified. Roy Disney was unavailable for comment Thursday. 'Terrific News' But Stanley P. Gold, a former Disney board member and close business associate of Roy E.

Disney, called the Bass group's move "terrific news. Sid's long-term. He did the company the greatest favor in the world by taking Jacobs out." Although the two sides of the Disney clan have not been closely aligned for a number of years, the company was not deemed an easy takeover target until Roy E. Disney resigned from the board in March and began increasing his Disney holdings. At the time, Walt Disney's heirs held the upper hand, with a Walt Disney son-in-law, Ronald W.

Miller, serving as president and chief executive. To reunify the family in the face of takeover threats, management invited Roy to return to the board in June and gave him two additional seats. Last month, the Roy Disney group allied with the Basses Please see DISNEY, Page 2 promissory note's interest rate is a "market rate of interest," meaning that the note would carry a present value of $6. HRT shares closed unchanged at $5,625 in trading Thursday on the New York Stock Exchange. Volume was 100 shares.

"We are confident that this is a fair and reasonable offer under the existing circumstances of the company," said Green, who was named chairman in March. "Obviously, it will be the management position that is in the best interests of the company." HRT hopes to issue a proxy, conduct a shareholder vote and close the deal within 90 days, Green said. HRT operates the Zody's discount department store chain. In August, HRT sold its chain of 71 Karl's shoe stores to a unit of May Department Stores Co. of St.

Louis. The offer to take HRT private was technically made by Joint Venture, which was formed in December, 1983, by McCrory and Schottenstein Stores Corp. to bail out financially troubled HRT. The venture took ownership of 55 of HRT. Please see HRT, Page 2 Massachusetts.

About 15,000 employees of Los Angeles County have purchased nearly $83 million worth of annuities from Capitol Life under a deferred compensation plan. Capitol Life, one of the largest writers of single-premium annuities in the nation, is a subsidiary of Bermuda-based Providence International a private insurance holding company. (In a single-premium deferred annuity, a customer makes a non-taxable deposit with an insurance company that accumulates interest until maturity, usually at retirement age. Although specific terms of the definitive agreement were not an- Please see KAUFMAN, Page 2 al Intergroup preferred shareholders would also receive a similarly valued new issue of Bergen Brunswig preferred. Based on Wednesday's closing prices on the common stock, the deal is worth only about $25.57 a share for National Intergroup common shareholders.

Top officials at both companies concede the merger agreement wasn't greeted with much enthusiasm. But they defended the deal on two fronts. First, they said, it helps National Intergroup expand into the distribution service industry, a business with a far better future than the steel industry. Secondly, Bergen Brunswig will used National Intergroup's large reservoir of assets to expand its health-care operations. "They'll use our cash to expand their operations," National Intergroup chairman H.

M. Love said in a phone interview. "That's where the real synergism is. It's like two plus two equals five." National Intergroup has approximately $400 million in cash, almost $300 million of which came after it sold a 50 interest in National Steel to Nippon Kokan KK, a large Japanese steelmaker. The company also has about $500 Please see BERGEN, Page 8 On Aug.

16, Oak Industries announced that it intended to sell the bulk of its ON-TV system in Los Angeles to SelecTV for an undisclosed amount of cash and a percentage of the revenues from the combined operations. Alan Cole-Ford, a cable- and pay-TV analyst with Paul Kagan Associates in Carmel, estimated the value of the deal at about $20 million, representing a significant decline from ON-TV's market value during its peak in late 1981 and early 1982. At that time, ON-TV's subscriber base had climbed to about 380,000. SelecTV's subscriber base also reached a high point in late 1981 of 125,000. Ever since then, however, both companies have suffered as part of Please see ON, Page 2 By KATHLEEN DAY, Times Staff Writer Even though Defense Secretary Caspar W.

Weinberger has just halted Pentagon purchases of the controversial Sgt. York anti-aircraft gun in fiscal 1985, the Army is considering committing as much as $800 million for 117 of the guns within weeks, using 1984 funds, The Times has learned. Undersecretary of Defense Richard D. DeLauer, long a supporter of the program, and Ford Aerospace Communications the Newport Beach division of Ford Motor Co. that is building the gun, confirmed Thursday that both sides expect the Army to agree to the purchase by Nov.

4, when its option to do so expires. The Army can buy the 117 weapons because Weinberger's freeze of funds applied only to fiscal 1985. Funds allocated by Congress in fiscal 1984 and previous years can still be spent even if actual purchases occur after the year in which funds were allocated. Weapon Problems Ford Aerospace said that substantial sums allocated for the Sgt. York gun in 1984 have not yet been committed by the Army because of problems with the weapon.

The Army has already spent about $1 billion for 146 of the guns, which are intended to defend troops from low-flying aircraft. Because of poor test performance and production delays that have put production far behind schedule, however, Weinberger asked the Senate this week to freeze most Sgt. York funding in fiscal 1985, which began Monday, until tests can show that continued production of the weapon "is in the national interest." Only $100 million of the $480 million proposed for the program in fiscal 1985 would be spent, and then only on support materials for units that might be ordered later. A congressional aide familiar with military appropriations, who asked that he not be identified, said that at those Senate hearings he had the "clear understanding" that Weinberger was committed to freezing 1984 funds as well until tests were completed next summer. He said, though, that Pentagon officials left room for "interpretation" of Weinberger's statement.

Mark Albrecht, an aide to Sen. Pete Wilson, a California Republican, said he does not think Weinberger's freeze applies to 1984 funding for the 117 guns, but he said that Army officials at the hearings this week said they would "probably" not buy those guns until test results are available next September. He said the officials made it clear they think the test results will be favorable and the Sgt. York program will continue after the fall of 1985. Weinberger this week also repeated warnings from last summer that the Pentagon is considering scrapping the gun sys-Please see YORK, Page 2 Money Supply Off $2.4 Billion NEW YORK OB-The nation's basic money supply fell $2.4 billion in mid-September, the Federal Reserve Board reported Thursday.

The drop was larger than economists had expected, but it had little effect on the bond market, where prices and rates remained mostly unchanged. The Fed said the basic money supply, called Ml, fell to a seasonally adjusted $547 billion in the week ended Sept. 24 from $549.4 billion the previous week. Ml includes cash in circulation, deposits in checking accounts and non-bank travelers checks. For the latest 13 weeks, Ml averaged $546.7 billion, a 4.7 seasonally adjusted annual rate of gain from the previous 13 weeks.

The Fed has said it would like to see Ml grow between 4 and 8 from the fourth quarter of 1983 through the fourth quarter of 1984. The latest Ml drop leaves the money supply in the bottom half of the Fed's target range $11.8 billion below the upper target and $5.9 billion above the lower target. Since the beginning of the year, Ml has grown at an annual rate of 5.7, but since June it has been growing at a 1.8 annual rate. Please see MONEY, Page 2 HRT Industries the Los Angeles -based retailer that successfully emerged from bankruptcy reorganization earlier this year, said Thursday that it has received an offer from McCrory owner of 55 of HRT, to convert the firm to private ownership. Under terms of the offer, HRT shareholders would receive a $6 promissory note that would pay 14.5 and be due in three years.

The note would be guaranteed by McCrory, a retailing unit of New York-based Rapid-American Corp. HRT Chairman Steven J. Green said the offer is subject to approval by a majority of the holders of 45 of the shares not owned by McCrory. The provision is required under the firm's Chapter 11 reorganization plan. Green said HRT management would recommend approval of the plan.

He added that he has already negotiated an agreement with the largest minority shareholder, Smith Vasiliou Special Situation Fund, to vote for the merger plan and sell its 7.5 block of HRT stock. Green said he believes that the Talks to Sell ON-TV's L.A. Unit to SelecTV Canceled By LOUIS SAHAGUN, Times Staff Writer Boycott Over Nestle Infant Formula Ends By DAVID KUPFERSCHMID, Times Staff Writer WASHINGTON Leaders of the International Nestle Boycott Committee, indicating that they are satisfied Nestle Co. is reforming its methods of marketing baby formula in Third World nations, announced Thursday that they have ended a seven-year boycott of the firm's products. But at the same time, the committee expressed concern that three U.S.

manufacturers have begun using the same marketing techniques that prompted the boycott campaign and warned that these firms "are deserving of public sanctions." The boycott of Swiss-based Nestle had been suspended since Jan. 26, after Nestle stated its commitment to help implement the World Health Organization's international code of marketing breast-milk substitutes. Aggressive Promotion The boycott had been triggered by accusations that the company's aggressive promotion of baby formula in underdeveloped nations encouraged mothers to switch from breast- to bottle-feeding, contributing to infant malnourishment and increasing their susceptibility to disease because water used for mixing the formula is often unclean. Nestle reportedly bestowed gifts on doctors who promoted sales of the formula and delivered free supplies of formula to hospitals and mothers without warning that excessive reliance on the product and its improper dilution and storageposed a health hazard. Company officials acknowledged that "promotion of infant formula by the industry poses the risk that it may discourage mothers to breast-feed." But boycott leaders said progress has been made by Nestle "in being prepared to change marketing policies." The WHO code now espoused by Nestle calls for companies to develop educational materials about infant nutrition, to place warnings on formula labels and to halt financial inducements to health professionals.

Douglas A. Johnson, chairman of the Infant Formula Action Coalition, which started the boycott in 1977, lauded Nestle's adherence to Please see NESTLE, Page 2 ly because of heavy sales of back-to-school apparel. Sales of durable goods such as major appliances "were not as good," particularly compared to last year, when sales of those products were "very strong," he said. David Jackson, an analyst at the Los Angeles brokerage of Morgan, Olmstead, Kennedy Gardner, said the weakness in the sales of expensive items reflects the slowdown in housing turnovers and new-home sales. He noted, however, that consumers are still well equipped to spend because they are saving at a rate of 6, up from 5 a year ago.

Weather affected sales in some parts of the country. Unseasonably hot weather in California, for ex-Please see RETAILERS, Page 2 Kaufman Broad Unit May Purchase Capitol Life By LOUIS SAHAGUN, Times Staff Writer San Diego-based Oak Industries Inc. said Thursday that negotiations to sell most of its Los Angeles ON-TV over-the-air pay-television service to rival SelecTV have ended because the companies could not reach agreement on a final contract. "We're not commenting on the details involved," said Robert Hartney, Oak Industries vice president-corporate relations. "But there were a number of points on which we failed to come to a satisfactory agreement." Some industry observers have suggested that the talks bogged down, in part, when it became apparent that combining the two systems, which operate on different frequencies, would not be cost-effective.

Retailers Get Boost from School Apparel An insurance subsidiary of Los Angeles-based Kaufman Broad Inc. has taken an option to buy troubled Capitol Life Insurance Co. of Denver, the home-building firm said Thursday. Kaufman Broad Inc. said a newly formed unit of its life insurance holding company, Sun Life Group of America, has been granted the three -week option to decide whether to sign an already detailed definitive agreement whose terms were not disclosed.

Capitol Life reported a loss for 1983, which it attributed to heavy expenses related to its rapid growth. The loss triggered reviews by state insurance officials, and the company has agreed to stop selling its policies in By NANCY YOSHIHARA, Times Staff Writer particularly in Southern California. Monroe Greenstein, an analyst at Bear, Stearns a New York-based brokerage, said sales were strong in early September primari- Major U.S. Retailers' Sales In millions of dollars Despite a slowdown in sales of appliances and other big-ticket items, the nation's major retailers reported Thursday that they had moderate sales increases in September, thanks in part to brisk apparel sales early in the month. The sales gains from a year ago, which ranged from 4 for Sears, Roebuck Co.

to 17 for Carter Hawley Hale Stores were seen by analysts as a good sign for continued strength through the all-important Christmas season. The September results were in line with those of August, when sales rebounded from disappointing levels in July. September sales, however, were uneven, with the first half of the month outpacing the second half. There were heavy promotions throughout the month, Markets at a Glance Thursday, Oct. 4, 1984 n-frrrr DOW 30 NYSE AMEX NASDAQ WILSHIRE 1 I I 1 I I 1 I I 1 4.53 0.21 0.09 0.39 3.709 Sept.

Sept. 1984 1983 change Sears 2,166 2.074 4.0 mart 1,923 1.644 17.0 Penney 1,100 966.0 14.6 Federated 848.8 764.1 12.6 Woolworth 646.6 616.1 6.9 Montgomery Ward 614.1 664.6 10.7 Dayton-Hudson 672.6 687.7 14.4 May Dept. Stores 462.4 393.0 16.1 Carter Hawley Hale 334.4 286.7 17.0 Assoc. Dry Goods 363.6 329.8 10.3.