Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 10, 1993 TAG: 9312100194
SECTION: BUSINESS PAGE: B-12 EDITION: METRO
SOURCE:
DATELINE: WILMINGTON, DEL. LENGTH: Medium
QVC is offering a combination of cash and stock worth about $10.2 billion for Paramount, while Viacom Inc., which had agreed to a friendly merger with Paramount, is offering $9.4 billion.
The ruling was expected to set off a new round of bidding, with Viacom trying to match or surpass QVC's offer.
The Delaware Supreme Court affirmed a Chancery Court decision that said Paramount's directors had violated their duty to shareholders by trying to deploy the company's "poison pill" defense against QVC, but not Viacom.
The poison pill allows Paramount to sell stock to its shareholders at bargain prices, flooding the market and making a takeover prohibitively expensive for unwelcome bidders.
The justices also upheld the lower court's ruling against Paramount's attempt to grant millions of dollars in stock options to Viacom.
The state Supreme Court, in an oral order from the bench, said the Paramount directors failed to investigate properly the offer by QVC, the West Chester, Pa.-based home shopping channel. QVC launched its bid eight days after Paramount and Viacom, which owns cable channels including MTV and Showtime, announced their merger deal Sept. 12.
Paramount's directors had recommended the company's shareholders accept Viacom's bid and ignore QVC's higher offer.
Chief Justice Norman Veasey, reading the court's opinion, said Paramount, in trying to merge with Viacom, effectively put itself up for sale. Once that decision was made, Paramount directors "had a duty to continue their search for the best value for stockholders," he said.
Paramount argued it had made a "strategic" merger with long-term value and didn't have to open itself up to all prospective buyers.
by CNB