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 WEST CHESTER, Pa., Oct. 21 /PRNewswire/ -- QVC Network, Inc. (NASDAQ-NMS: QVCN) announced today that it will commence a $4.8 billion cash tender offer for 60,437,000 shares, or 51 percent, of the outstanding common shares of Paramount Communications Inc. (NYSE: PCI) at a price of $80 per share.
 If the tender offer is successful, QVC said it intends to begin a second-step merger under which each remaining Paramount share would be exchanged for 1.42857 QVC common shares. The combined value of both transactions would be approximately $9.5 billion. Separately, QVC said it would begin legal action against Paramount and Viacom Inc. (AMEX: VIA) for breach of fiduciary duty.
 "What underlies our decision to commence a tender offer and what has been obscured over the last few weeks is the significant differential between the total value and cash portions of the QVC and Viacom offers. QVC's present offer of is worth approximately $80 per share -- $80 cash for 51 percent of the shares and QVC common stock for the remaining Paramount common stock -- which is 25 percent greater than Viacom's offer of $64.19 per share, of which only $9.10 is in cash. That is a cash differential of over $3.7 billion," said Barry Diller, chairman and chief executive officer of QVC.
 "Since the time of our offer, Paramount management has neither met with QVC nor scheduled any substantive meetings. Incredibly, in light of Viacom's refusal to improve its offer, the only actions taken by Paramount management and its board of directors have been designed to demean the value of our company or create potential regulatory obstacles to make our superior offer unavailable to its shareholders. One of the purposes of our tender is to empower the shareholders of Paramount to make their displeasure evident to their board of directors regarding their actions with respect to our offer."
 "We had hoped Paramount would agree to create a level playing field out of a sense of corporate responsibility and fairness. For 31 days, we have fulfilled their every request for information and waited respectfully. Yesterday, we requested they agree to commence direct negotiations. They responded they would be `in touch.' Our patience has been misinterpreted and is now at an end."
 The Viacom proposal announced on Sept. 12 offers $9.10 in cash, 0.1 Viacom Class A and 0.9 Class B shares for each Paramount share. QVC presented its offer of 0.893 shares of QVC common stock and $30 in cash for each Paramount share on Sept. 20, and asked to begin merger discussions. After press reports indicated Paramount was concerned about QVC's financing, QVC on Sept. 26 delivered written notification that its financing was assured.
 On Sept. 27 Paramount asked for proof of QVC's financing. On Oct. 5, QVC delivered commitment letters for $3 billion in bank financing and $1 billioni?n equity financing from its equity partners, Comcast Corporation and Liberty Media Corporation, and again asked to meet with Paramount's board. On Oct. 17, QVC announced that it had obtained an additional $1 billion in equity financing from Cox Enterprises, Inc., and Advance Publications, Inc.
 Throughout this period, Paramount and Viacom have consistently questioned the value of QVC's shares. However, in the 31 days since QVC's offer was announced, QVC shares worth more than $1 billion have changed hands, and the stock is trading above the price it closed at on the day of the announcement. Over the same period, Viacom Class B shares worth only $325 million have been traded, and the price of those shares has declined 8 percent.
 QVC said that it would continue to attempt to negotiate a merger with Paramount, and cautioned that any merger agreement with Paramount could result in termination of the tender offer and second-step merger announced today, and could also contain a mixture of securities and cash different from those that would result from the transactions announced today.
 QVC said its tender offer will commence no later than Wednesday, Oct. 27. The offer will be subject to receipt of valid tenders for a minimum of 60,437,000 Paramount shares. If more shares are tendered, QVC will purchase 60,437,000 shares on a pro rata basis. The offer is subject to various other conditions, including receipt of financing and satisfactory assurance that the second-step merger can be effected. The second-step merger's share exchange ratio of 1.42857 shares of QVC common for each Paramount share is equivalent to $80 of QVC stock per Paramount share, based on the $56 closing price of QVC stock on Sept. 20, the day QVC first made its proposal.
 Separately, QVC said it would bring suit in Delaware Chancery Court against Viacom Inc., Paramount Communications, and certain Paramount directors, seeking to compel fair treatment of QVC by Paramount's board and to invalidate lockup agreements and share purchase options given by Paramount to Viacom.
 The suit charges the defendants with breach of fiduciary duty, citing Paramount's grant of undue advantages to Viacom and its offer while refusing to give fair treatment to QVC's offer.
 The QVC suit asks the Court to order Paramount's board to give QVC's offer equal consideration with Viacom's, and to void the so-called "lock-up" agreements granted by Paramount in connection with the Viacom offer. These include a requirement that Paramount pay Viacom $100 million if Viacom's bid fails, and an option allowing Viacom to buy Paramount shares equal to approximately 20 percent of the total shares outstanding at a price of $69.14 per share.
 -0- 10/21/93
 /CONTACT: Michael Rourke, 212-371-5999 or 215-429-8303, or (investors) William F. Costello, 215-430-8948, both of QVC; or Diana Brainerd of Abernathy/MacGregor/Scanlon, 212-371-5999/

CO: QVC; Paramount Communications; Viacom International Inc. ST: Pennsylvania IN: ENT SU: OFR

TS-MP -- NY100 -- 5427 10/21/93 16:28 EDT
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Publication:PR Newswire
Date:Oct 21, 1993

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