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D-Day Here in Paramount Takeover Battle

From Reuters

QVC Network Inc. is facing the moment of truth in its four-month, $10-billion battle to wrest Paramount Communications Inc. away from rival suitor Viacom Inc.

QVC’s and Viacom’s current tender offers to Paramount stockholders expire today. Takeover stock specialists say Viacom will win the contest unless QVC improves its bid, thus extending the battle one more day, to Tuesday’s deadline set by Paramount for “best and final” offers.

“They’re coming back, or they’re going to lose,” said an arbitrager who said he and other arbitragers will tender their Paramount stock to Viacom if QVC does not improve its bid.

Analysts and arbitragers said they were expecting QVC to revise its bid today, but public comments and leaks from the QVC camp have cast doubt over such speculation.

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“I think they’re probably going to change their bid to make it more attractive,” said analyst James Meyer of Janney Montgomery Scott.

QVC had no comment Sunday about its plans.

A source close to QVC said Friday that QVC’s bid was higher and that it was possible the bid would not change.

QVC’s bid is $92 a share in cash for 50.1% of Paramount shares, and securities for the rest. The total value of the bid is estimated at $84.50 a share, or $10.2 billion.

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Viacom is bidding $107 a share in cash for 50.1% of Paramount, plus securities.

The total current value of the Viacom bid is about $83 a share, or $10 billion.

But the higher cash portion in Viacom’s bid and a financial instrument protecting the value of the securities are regarded as tipping the balance in Viacom’s favor.

Paramount withdrew from a merger agreement with QVC on Jan. 21 and entered a pact with Viacom, based on Viacom’s Jan. 18 bid.

QVC has raised its offer twice from an initial cash-and-stock bid of $80 per share, or $9.7 billion, made Sept. 20. Viacom has revised its offer four times from an initial $69.14-a-share in cash and stock, announced Sept. 12.

Any new revised QVC bid is expected to offer more cash and protection to the securities in the “back end” of the offer. If QVC raises its bid before the 2 p.m. PST deadline, that could set off another round of bidding Tuesday.


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