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Film and video production companies

Viacom Faces Deadline in Bidding War for Paramount Communications Inc.

Strategic Insights

— 1 min read

Viacom, a prominent media and entertainment conglomerate, is set to respond to QVC Network's $9.7 billion bid for Paramount Communications Inc. by Friday. However, Wall Street traders believe Viacom will take action before the deadline, with reports suggesting the company may finance a higher bid through bank loans. The bidding war, which has been ongoing for four months, has seen various parties, including Blockbuster Entertainment and Nynex Corp., investing in Viacom's offer. The battle for Paramount Communications could extend into February, with the top bidder required to keep its tender offer open for an additional 10 days after receiving majority shareholder tenders.

Key Takeaways:

  • Viacom faces a deadline of Friday to respond to QVC Network's $9.7 billion offer for Paramount Communications Inc.
  • Wall Street traders expect Viacom to increase its bid or throw in the towel soon.
  • Viacom may finance a higher bid through bank loans, with Citibank, Morgan Guaranty, and Bank of New York extending credit to the company.
  • Other analysts believe the banks may exact stiff guarantees on the loan repayments, prompting alternative investors like Nynex Corp. or Blockbuster Entertainment to join Viacom's bid.
  • Blockbuster has already committed $600 million to Viacom's offer and has tripled its credit line to $1 billion.
  • The bidding war could be prolonged, with the top bidder required to keep its tender offer open for an additional 10 days after receiving majority shareholder tenders.

Statistics:

  • The value of QVC's bid for Paramount Communications Inc. is $9.7 billion.
  • Viacom's current bid for Paramount Communications Inc. is $9.5 billion.
  • The amount that Viacom needs to add to its offer to top QVC's bid is $600 million.
  • Blockbuster has committed $600 million to Viacom's offer.
  • The interest-free credit line for Blockbuster has been tripled to $1 billion.

Sources:

  • New York Wall Street traders, as cited in the article.
  • Viacom Inc.
  • QVC Network Inc.
  • Citibank
  • Morgan Guaranty
  • Bank of New York
  • Blockbuster Entertainment
  • Nynex Corp.
  • Securities and Exchange Commission (SEC) filings.

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