QVC’s $10.5 billion offer outweighs Viacom’s $9.5 billion only for the moment. Word on the Street suggests Viacom will quickly sweeten its offer. Will QVC respond, tit for tat?
The game could go another month. Paramount’s independent directors are expected to appoint an outside bank to run a full-fledged auction of the company, and that will take time. Meanwhile, newcomers may be tempted into the fray. Among rumored entrants: Bertelsmann, Germany’s publishing giant.
Paramount is not legally obliged to sell out to the highest bidder, as some reports have suggested. Last weeks court case merely requires the directors to fairly evaluate competing offers on behalf of their shareholders. if there are compelling reasons for accepting a lower offer–such as the superior long-term “synergies” of a merger with Viacom–it can still do so. A question: would the shareholders accept such a move, or defy their board by tendering shares to the highest bidder?
As things are going, whoever “wins” Paramount may not be celebrating for long. Industry analysts think the company’s stock will hit $90 a share before the bidding ends. (At the weekend the price was $81.) Yet many of those same analysts put Paramount’s true market value at around $75 a share. “Congratulations,” one would tell the eventual victor, “here’s your black ribbon,” a token of recognition that, even in the austere ’90s, takeover fever can get out of hand.
