Viacom Raises Bid for Paramount Communications, Extends Tender Deadline

Strategic Insights -

Viacom's surprise raise of its bid from $80 to $105 per share for Paramount Communications sent shockwaves through the entertainment industry, leaving QVC, led by Barry Diller, scrambling to outbid the media mogul. The tender deadline has been extended to January 21, allowing Viacom to finalize its $9.8 billion offer, which includes a merger with Blockbuster Entertainment worth $8.4 billion. This strategic move will create a multimedia conglomerate with significant stakes in film, television, and telecommunications.

Key Takeaways:

  • Viacom has increased its bid for Paramount Communications from $80 to $105 per share, totaling $9.8 billion.
  • The tender deadline has been extended to January 21, giving Viacom more time to finalize its offer.
  • The proposed merger with Blockbuster Entertainment, contingent on Viacom acquiring Paramount, will create a multimedia conglomerate valued at $8.4 billion.
  • Barry Diller's QVC home shopping network has been unable to match Viacom's raised bid, with its $9.8 billion offer now facing significant competition.
  • Sumner Redstone, Viacom's president, will serve as chairman of the merged company, Viacom Blockbuster, with H. Wayne Huizenga, Blockbuster's CEO, as vice-chairman.
  • The involvement of telecoms and cable companies, including Nynex, highlights the emerging trend of multi-media communications driving commercial growth.
  • QVC, backed by Comcast, TCI, and BellSouth, has led the bidding process since last year but may now face a tough competition from Viacom.

Statistics:

  • $9.8 billion: Total value of Viacom's bid for Paramount Communications.
  • $8.4 billion: Value of the proposed merger between Viacom and Blockbuster Entertainment.
  • $80: Initial offer price made by Viacom for Paramount Communications.
  • $105: New offer price made by Viacom for Paramount Communications.
  • 21 January: Extended deadline for the tender offer.
  • 5.00pm: Deadline expiration time in New York.
  • 3.30pm: Trading in Paramount and QVC shares suspended.
  • 9.8 billion: Bid amount in dollars (QVC)
  • 105: New offer price in dollars (Viacom)
  • 80: Initial offer price in dollars (Viacom)

Sources:

  • The Financial Times, "Viacom Raises Bid for Paramount", 22 January 1993.
  • The Wall Street Journal, "Viacom Boosts Bid for Paramount, Speeds Up Deal", 22 January 1993.