QVC Says It Has Financing to Buy Paramount
NEW YORK (AP) _ QVC Network Inc. moved Saturday to defuse a key argument against its hostile takeover bid for Paramount Communications Inc., saying it had obtained full financing for a tender offer.
Paramount, which already has accepted a vastly lower offer on Viacom Inc., defended its rejection of QVC’s unsolicited bid in Chancery Court in Delaware last week partly by arguing that it was contingent on financing.
Paramount and Viacom also argued that they made a compelling strategic fit.
Paramount is a leading entertainment producer that makes movies and TV shows, owns sports teams and theme parks and publishes books. Viacom owns cable TV networks like MTV and Showtime and has cable TV systems with 1.1 million cable subscribers.
QVC, led by onetime Paramount Pictures boss Barry Diller, operates cable shopping channels from its base in West Chester, Pa.
It said Saturday that it had received financing commitments from six banks for $3 billion that can be used for its hostile tender offer for Paramount.
It said the regional phone company BellSouth Corp., which had earlier expressed an intention to invest $1.5 billion in QVC, had now committed itself to do so.
QVC felt that its effort to acquire Paramount has never gotten fair treatment from the Paramount board. It went to court last week in Delaware, where Paramount is incorporated, to seek removal of antitakeover provisions that make an unwanted offer for Paramount difficult to undertake.
Those provisions include a so-called poison pill that would permit Paramount to flood the market with more stock if a bidder it didn’t like appeared. Viacom has also been granted fees and stock options that could be worth $600 million if its deal with Paramount collapses.
Vice Chancellor Jack Jacobs, the judge in the Delaware court brawl, is expected to rule on Monday, and the loser expected to appeal immediately to the state’s Supreme Court.
Monday is also the expiration date for Viacom’s $85 a share cash offer for 51 percent of Paramount’s shares. Viacom plans to exchange Viacom stock for the rest in the second phase of the merger.
QVC is offering $90 a share in cash for 51 percent of Paramount’s stock in an offer that now expires on Nov. 29, and will pay stock for the remainder later. The total value of the takeover is about $10.6 billion.
The stock market has been valuing QVC’s bid at roughly $1 billion more than Viacom’s offer, but the Paramount board rejected it last week as for both strategic reasons and because it contained legal and financial contingencies.
Diller, in a letter sent Friday to the Paramount board, said the new financing commitments and last week’s decision by federal antitrust regulators to let the deal proceed once cable powerhouse John Malone’s Liberty Media Corp. dropped out as a backer of QVC removed key reasons cited for rejecting his bid.
Diller said it was now clear that Viacom and QVC were competing bidders for Paramount and that the Paramount board ″should negotiate with both Viacom and QVC to obtain the higher and best transaction for the stockholders.″
Efforts to reach Paramount for comment were unavailing late Saturday.