Tender offers for Paramount's shares were extended yet again last Friday when Viacom revised its package an hour before the bidding deadline, offering dollars 105 a share in cash for just over half the company.
The new bid appeared to top QVC's offer of dollars 92 a share, but Viacom at the same time cut the so- called 'back end' of the deal, the amount it will pay for the remaining 49.9 per cent of Paramount's shares.
At current prices, the average value of Viacom's bid is less than dollars 79 a share, or about dollars 9.4bn, compared with the dollars 82 QVC is offering. Viacom's last-minute announcement did, however, prevent anxious Paramount shareholders from tendering to QVC, leaving it with commitments for only 28 per cent of the shares at Friday's deadline, well shy of the majority needed to end the auction.
QVC yesterday said it would await a meeting of Paramount directors tomorrow before taking action, but reports said it was considering legal means to force the board to cut short the latest 10-day bidding extension. QVC argues Viacom's new bid is worth less than its earlier bid - a clear violation of the bidding rules Paramount announced last month.
If the directors fail to act, analysts suggested, QVC might set its own deadline for tenders under the terms of its offer, forcing the shareholders' hand.
Sumner Redstone, Viacom chief executive, denies the bid is either coercive or cynical. Given the volatile valuations of the all-share second portion of the offers, investors might decide in favour of the higher cash price, gambling that their shares will be among the first 50.1 per cent tendered.
'Cash is king,' Mr Redstone told a meeting of investment bankers in Palm Springs, adding that it was now up to investors to decide which bid was superior.Reuse content