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Cable television broadcasting industry

QVC and Viacom Raise Bids in Battle for Paramount Communications

Strategic Insights

— 1 min read

In a dramatic turn of events, QVC Network Inc. and Viacom Inc. submitted revised bids for entertainment giant Paramount Communications Inc. just moments before the deadline, raising the stakes in the $10-billion battle. Home shopping network QVC increased the cash portion of its bid by $750-million to $104 a share, while Viacom improved the value of the second step of its offer, increasing its total offer value. The rival bids have sparked a heated debate among traders, with some considering Viacom's bid to be the better offer.

Key Takeaways:

  • QVC raised the cash portion of its bid by $750-million to $104 a share for 50.1% of Paramount.
  • Viacom increased the value of the second step of its offer, improving the total offer value.
  • QVC also secured a $500-million investment from BellSouth Corp. to buy common stock at $42 a share.
  • Arbitragers, who hold an estimated 30-40% of Paramount's stock, had been swayed by Viacom's offer due to its higher cash portion and a financial instrument protecting the value of the securities.
  • Paramount shares rose 25 cents to close at $79.87 on the New York Stock Exchange.
  • QVC jumped 75 cents to $44.75 on the Nasdaq Stock Market, while Viacom fell 25 cents to $39 on the American Stock Exchange.

Statistics:

  • QVC's revised bid is worth $104 a share for 50.1% of Paramount Communications.
  • Viacom's revised offer includes $107 a share in cash for 50.1% of Paramount and securities for the rest.
  • Paramount has been sought after by QVC and Viacom for its programming, including movies and television studios, theme parks, and sports properties.
  • Arbitragers withhold 30-40% of Paramount's stock has a significant impact on the outcome of the bid.

Sources:

  • Reuters News Agency (no date)
  • QVC Network Inc. (no date)
  • Viacom Inc. (no date)
  • BellSouth Corp. (no date)
  • New York Stock Exchange (no date)
  • Nasdaq Stock Market (no date)
  • American Stock Exchange (no date)

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