Paramount suitor Sumner Redstone is trying once and for all to silence talk that there may be more dollars up Barry Diller’s sleeve.
In a letter sent late Wednesday to Paramount’s board of directors, Viacom called QVC’s reported plans to have its partners buy QVC stock — enriching its bid — a violation of federal securities laws, and urged Paramount to take action against QVC.
“Viacom believes that these reported statements are a backdoor attempt by QVC to change its offer after the Feb. 1 deadline,” Viacom counsel Philippe Dauman wrote in the letter. “(They) seem explicitly designed to support QVC’s stock price, manipulate the market’s perception of QVC’s offer … and generally confuse the market concerning the bidding process.”
A QVC spokesman dismissed the charges. “Viacom is always suing or accusing somebody of something,” he said. “As for QVC, we did nothing improper.”
While both players have been careful to maintain a public silence in order to obey securities laws governing tenders, each has trash-talked behind the scenes to prevent the other from receiving the needed 50.1% of Par’s outstanding common stock.
Under the current rules, the bidder who receives that amount of Par stock by Monday wins.Both parties have agreed the winner will extend its offer for 10 days to allow investors who have tendered to the loser to reverse positions. If neither receives 50.1%, the bidding reopens. Paramount’s board has not yet decided to declare a winner based on a simple majority, although that was initially said to be a possibility.
With the 10-day safety net, reports that QVC’s partners might buy its stock have piqued shareholder interest. Large investors who have held Par shares until now may be willing to wait a few more days if it means another round of bidding and ultimately, a higher price.
While Viacom’s letter does not explicitly threaten legal action, saying only that it “will consider all options and remedies available under the merger agreement and the federal securities laws,” sources close to Viacom said it may sue QVC if Viacom fails to get 50.1% of Par’s stock on Monday.
The letter echoed comments Redstone made earlier Thursday. “As I understand the bidding rules, the bidding is over,” he told reporters at an industry luncheon here.
Auction rules preclude either bidder from changing its bid before the current tenders close, but QVC supporters say talk of potential purchases by BellSouth or its other partners is not a direct change to the bid.
A source close to the telco has said several options are being considered to provide price protection in the securities tranche of QVC’s offer.
QVC shares closed 50 cents higher at $ 45.63 Thursday and its bid was valued at $ 85.84 per share. Viacom Class B shares finished 50 cents lower at $ 32.75 — a price at which its so-called “collar” does not apply — and its bid was worth an estimated $ 82.36 per. Paramount shares also ended the day 50 cents off at $ 76.88.