QVC and Viacom Raise Bids in Battle for Paramount Communications

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)