Company Town : Court Delays Decision on Paramount; Bids Extended

A crucial legal decision in the battle for Paramount Communications Inc. has been delayed until Wednesday, obliging Viacom Inc. and QVC Network Inc. to extend by two days their competing bids for the entertainment and publishing company.

In a conference call Monday morning, Jack Jacobs, Delaware Chancery Court vice chancellor, informed the parties that he needed more time to review their voluminous briefs--some of which were filed as recently as Sunday--and asked them to extend their tender offers.

QVC is seeking to overturn key provisions of Viacom’s friendly, $9.2-billion bid for Paramount. Viacom’s $85-per-share cash tender offer for 51% of Paramount’s stock was scheduled to expire Monday but has now been extended to Wednesday.

QVC’s competing $90-per-share tender offer now expires Dec. 1. Sources said Paramount and Viacom were pleased that Jacobs preserved the time difference between the expiration of the offers, which gives Viacom a tactical edge.

QVC is asking the court to overturn Paramount’s “poison pill” defense, which effectively makes it impossible for QVC to complete its offer. It is also seeking to eliminate so-called lockup provisions that would grant Viacom about $600 million if QVC prevailed with its higher bid, which is valued at $10.6 billion.

No matter how Jacobs rules, the losing side is expected to appeal to the Delaware Supreme Court.

Separately, Paramount said Monday in a Securities and Exchange Commission filing that all of its executives and directors intend to tender their shares to Viacom with the exception of two, who were not identified. Paramount said one executive intends to sell his shares in the open market, and one “international director” intends to do the same due to tax considerations.

Paramount closed at $79, up $2.625 in composite trading, with 7.75 million shares changing hands. Trading was affected by the announcement that Paramount would be dropped from the Standard & Poor’s 500 index due to its imminent sale. QVC fell $1 to close at $49.75. Viacom Class A shares dropped $1.25 to close at $47.625, and Viacom Class B closed at $40.875, down $1.625.