Paramount invites more offers

NEW YORK - Directors of Paramount, responding to court criticism of their handling of takeover talks, said yesterday they had abandoned their preference for Viacom's dollars 9.6bn tender bid and called for 'best and highest offers' by 20 December, writes Larry Black.

But the board surprised many people by deciding not to create a special committee of outside directors to judge the competing bids despite complaints by a Delaware appeals court last week that it had neglected its fiduciary duty by agreeing to terms that 'locked up' a merger with Viacom.

The new procedures will still leave Paramount considerable latitude to favour Viacom's friendly offer over the dollars 10bn hostile bid by QVC Network. But Paramount dropped other biased bidding rules and said it would favour an offer that protected shareholders against a later 'squeeze-out merger' that would allow the new owner to force them out on unfavourable terms.

Paramount said its board now had a preference offer comprising cash and preferred shares - as opposed to common equity in the newly merged company - and favoured an unconditional transaction with as few regulatory uncertainties as possible.