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Hints, hype shape bets on Par

UBS Securities analyst Peter Siris downgraded his recommendation on QVC Network to “hold” from “buy” in the belief that Barry Diller might win the battle for Paramount, which likely would prompt a drop in QVC’s stock value.

Most Wall Street bets are on Viacom, which has wooed investors with its offer to guarantee a minimum share price under certain circumstances. The suitor who receives 50.1% of Par’s 118.5 million outstanding common shares as of midnight Monday will be declared the winner.

Bidding rules preclude adjustments, but if neither party receives 50.1%, the bidding reopens.

Wall Street is speculating that QVC is negotiating with its partners to commit funds for post-merger stock purchases that would effectively bolster its share price.

The QVC camp, which includes BellSouth, Comcast Corp., Cox Cable, Advance Publications and Liberty Media, is hoping hints of this strategy combined with Diller’s well-respected record will convince large Par holders to wait.

“We believe that QVC and its partners intend to strengthen its bid by devising a mechanism that would let the partners support the price of QVC stock, ” Siris wrote in a report. He noted that an offer by QVC’s partners to buy its stock is not technically a bid adjustment and as such might not violate legal requirements of the tender.

One source close to BellSouth dismissed reports that the telco is contemplating open-market purchases at a specific price. The source would say only that it is considering a number of options providing some price protection in the backend.

Viacom senior execs continued making the rounds Wednesday to count support for their bid, a source close to the company said.

On Wednesday, QVC shares closed unchanged at $ 45.13 with its Par bid valued at $ 85.53 per share. Viacom Class B shares settled $ 1.38 higher at $ 33.25 — a level at which the so-called “collar” does not apply — and its bid was worth $ 82.59 per share. Par closed up 63 cents at $ 77.38.

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