Sparring over Paramount threatens Tuesday deadline

February 12, 1994|By Bloomberg Business News

NEW YORK -- The sparring among Paramount Communications Inc. and its rival suitors, Viacom Inc. and QVC Network Inc., heightened yesterday, raising the prospect that the five-month takeover battle will limp past its scheduled Tuesday finale.

QVC, responding to "grave concerns" expressed by Paramount about its behavior, told the media and entertainment company it is complying with the auction procedures, which prohibit new bids before Tuesday.

At the same time, QVC stated that it was free to amend its bid if neither side gets a majority of Paramount shares by the expiration of tender offers at midnight Monday.

QVC also accused Viacom of running afoul of the bidding rules and rebuked Paramount for misleading shareholders that neither suitor could revise its bid.

Paramount responded that the restriction on new bids applies only under the current bidding procedures, which could be lifted if neither side gets a majority of shares under the current offers.

Traders and analysts said QVC Chairman Barry Diller was sending his strongest signal yet that he will sweeten his company's offer for Paramount, probably with the help of partner BellSouth Corp.

"I'm sorry to say, this thing doesn't look like it is going to end Monday," said Alvin Mirman, an analyst at Gruntal & Co. "QVC is sending out a pretty strong message that it is going to do something if shareholders don't tender their stock."

Based on yesterday's closing stock prices, QVC's bid is worth $87.37 a share, or $10.6 billion. Viacom's bid is worth $81.43 a share, or $9.9 billion. Paramount has endorsed Viacom's offer, and many investors consider Viacom's offer superior to QVC's because it includes more cash and would compensate shareholders if Viacom shares don't rise after the merger is completed.

Yesterday, Paramount told QVC it has "grave concerns" the company may not be complying with its auction procedures.

Paramount's letter to QVC was prompted by numerous reports that emanated from a meeting between Mr. Diller, the company's investment advisers and analysts and investors. Mr. Diller reportedly hinted that BellSouth could provide added support for QVC's $10.6 billion offer.

The Viacom letter said the reported statements were "a backdoor attempt by QVC to change its offer" after the Feb. 1 deadline for bids.

Meanwhile, QVC attorney Martin Lipton, in a letter to Paramount, said Viacom was the one that was breaking the rules with false statements to shareholders. QVC said Viacom had made false and misleading statements in meetings with analysts Thursday that QVC would be required to terminate its offer if neither side gets 50.1 percent.

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