The Paramount Communications board of directors will meet today to consider Viacom’s revised offer for the company.
But they will do so under intense scrutiny from both rival bidder QVC Network and Wall Street, which has thus far discounted Viacom’s new bid.
While more cash-heavy than QVC’s offer — Viacom is offering $ 105 cash for 50.1% of Paramount’s shares while QVC is offering $ 92 cash for 51% — the overall value of QVC’s offer is still superior to Viacom’s.
Even though Viacom’s stock showed some signs of life Tuesday after getting pounded on Monday — its Class A shares gained 50 cents to close at $ 42.375 while its Class B shares gained 62.5 cents to close at $ 38.875 — its offer is still valued at just $ 78.25 a share or $ 9.3 billion. QVC’s offer, on the other hand, is valued at about $ 84.30 a share, or $ 10 billion.
QVC has argued Viacom’s revised offer should not have triggered a new round of bidding because it’s still worth less than QVC’s most recent offer. While QVC on Monday extended its tender offer to Jan. 21, it said it will wait to see how Paramount’s board acts before deciding on further action; that could include seeking legal relief if unsatisfied with the board’s handling of the situation.
But QVC chairman Barry Diller — speaking at Tuesday’s Superhighway Summit at UCLA — said he doesn’t think there will be a need for QVC to raise its bid, and “if there is, I doubt we’ll do it.” Diller cautioned that “you can’t bar some completely unforeseen circumstance.” Even so, he said, “The bids are in and the public will decide.”
Many feel Viacom’s decision to put a new bid on the table that wasn’t much higher than its existing offer was nothing more than a last-minute ploy to keep QVC’s tender offer from closing Friday night and buy itself more time to come up with a better bid (as of midnight Friday, about 26.8 million shares of Paramount common stock had been tendered to QVC). But Viacom has given no clear indication that it is willing or prepared to increase its offer.
And everyone — including the Paramount board — seems to be tiring of waiting for the best bids to be on the table. For that reason, sources said some Par board members are now seeking to accelerate the auction process. While both offers are scheduled to close Jan. 21, any revised bid would require they stay open an additional 10 days from the time it is submitted.
The last day that rule applies is Feb. 1, two weeks before the bidding timetable is supposed to end. “This drawn-out, laborious process is starting to have a very detrimental effect on Paramount as a whole,” noted one industry veteran. “Everyone involved knows that. You’re losing key people left and right and this thing better get wrapped up quickly if there’s going to be anything left worth buying.”
In recent weeks, Greg Gelfan, a veteran business affairs chief at the studio, left Par for 20th Century Fox, and Larry Gleason, theatrical exhibition group president, departed for MGM/UA.
While the board’s approval is considered important — especially in guiding smaller investors — it is non-binding, and large institutional holders already have stated publicly that they prefer QVC’s offer.