QVC to focus energy on bid for Paramount Home Shopping merger put on hold

September 22, 1993|By New York Times News Service

NEW YORK -- QVC Network Inc. intends to put its pending merger with Home Shopping Network Inc. on the back burner as it pursues its bid for Paramount Communications Inc., several people close to QVC said yesterday.

Such a move would leave Barry Diller, QVC's chairman, free to devote all his energies and financial resources to prying Paramount away from its proposed merger partner, Viacom Inc.

Wall Street seems to think that Viacom Chairman Sumner M. Redstone, and maybe others, will not easily let Mr. Diller have the last word. Paramount's stock soared yesterday, jumping $7.50, to close at $77, as investors and arbitrageurs became convinced that an escalating bidding war is inevitable.

As for Home Shopping, its stock continued to drop, falling 25 cents, to close at $10.875, on a day when most stocks were down after news of the political unrest in Russia.

QVC's plan for a stock swap with Home Shopping was aimed at giving the company dominance of the home shopping industry. But one investment banker close to QVC noted that it could always revive the Home Shopping deal after it had acquired Paramount, because, in effect, Home Shopping is a captive of QVC and is not sought after by other bidders.

QVC stock's behaved contrary to expectations yesterday, rising 12.5 cents, to close at $56.125, in Nasdaq trading. Generally, there is a drop in the stock of a company that offers to buy another company by using its own stock as part of the payment.

Arbitrageurs said they were somewhat surprised by the heavy trading. Executives close to QVC said that optimism about QVC's ability to manage the combined companies was pushing the stock up.

One institutional investor who has been buying QVC said he thought that yesterday's rise reflected the reasonableness of the price QVC was willing to pay for Paramount. Even if the QVC bid fails, this investor said, QVC shares are attractively priced, compared with their high of $73 months ago.

There were rumors yesterday that Capital Cities/ABC might become another Paramount suitor, but a company spokesman said there was no truth to those rumors.

A Paramount board meeting is scheduled for early next week to consider QVC's formal offer.

The unusual stock activity widened the price advantage that the QVC bid enjoys over the Viacom bid, and it prompted speculation that a new Viacom bid was imminent.

With the QVC bid still valued at $80 a share after yesterday's trading, Viacom's offer had fallen to $60.55 a share by yesterday's close. Viacom's Class A shares closed at $56.75, off $2.50. The Class B shares fell $2.625, to $50.875.

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