The Wall Street Journal said yesterday that the Securities and Exchange Commission was investigating trading in the cable shopping network's shares following a leak that it had been designated the victor in the first round of bidding for Paramount. Sources suggested that the SEC appeared concerned that QVC might have delayed giving information to officials of Nasdaq, the US market, preventing its shares from resuming trading that day.
Because the offers included large amounts of the bidders' shares, their market value was of critical importance in assessing the value of takeover of the media giant. Trading in shares of both companies and of the rival suitor, Viacom, was suspended just before 1pm New York time - about 20 minutes after wire services, quoting a lawyer for a group of Paramount shareholders, reported that Paramount had accepted the QVC bid.
QVC officials told Nasdaq at the time that they would issue a press release confirming the merger agreement. But the release came many hours later, after the market closed on Wednesday. When trading in Paramount shares resumed shortly before the close of the session - while QVC remained halted - there was considerable confusion among investors, who had expected the value of the share component of the bid to drop sharply, but could not gauge how far. QVC insisted yesterday that it was in constant communication with Nasdaq all day, and was expecting to issue the release 'at any moment'. But the deal was delayed; Paramount itself officially confirmed the deal only at 6pm, long after the close of regular trading on US exchanges.
When they finally reopened for trading on Thursday - the last trading day before Christmas - QVC's share fell only slightly, down 1/4 to 40, prompting charges that the company had engineered the halt to limit volatility in share price. Late yesterday, the share price was down 1 1/4 at 38 3/4 .
This is the third time the SEC has intervened in the battle for control of Paramount. Only two days before the incident - when both QVC and Viacom were scheduled to submit their offers to the Paramount directors - the regulators intervened to prevent QVC releasing details of its bid to the public.
The company, which was apparently trying to put pressure on what it claims is a hostile Paramount board, was finally allowed, long after the markets closed, to give details of its winning bid to the media.
The SEC is also investigating trading in Viacom shares, which were heavily bought by its own chairman, Sumner Redstone, and WMS Industries, a company he controls, in the weeks before its aborted merger agreement with Paramount. Shareholders complained that the buying artificially - and thus temporarily - inflated the nominal value of Viacom's original dollars 7.5bn share-and-cash offer.
Mr Redstone has denied trying to manipulate Viacom's share price, saying all his purchases were legal and properly disclosed.
Viacom has until 7 January to raise the value of its tender offer, forcing the Paramount board to abandon its agreement with QVC.Reuse content