In a move that pre-empted a bid from its rival, Viacom Inc. sweetened its takeover offer Saturday for Paramount Communications Inc.
Viacom, Paramount’s handpicked merger partner, increased its bid by 6 percent, to $10 billion. The new offer amounts to $85 a share, up from $80.
The timing of the move seemed aimed at derailing a higher offer from the rival bidder, QVC Network Inc. QVC has enlisted BellSouth Corp. as an investor in its hostile takeover bid.
Paramount’s properties include film and television studios, the New York Knicks basketball team, the New York Rangers hockey team and Simon & Schuster, the book publisher.
QVC executives seemed shocked at the latest development. Before Saturday, both Viacom and QVC had comparable $9.5 billion offers on the table that included about $40.80 per share in cash and the balance in stock.
The cash portion in each case was $4.8 billion.
A new offer by QVC, the television home shopping channel, had been in the works: Its board and that of BellSouth had met Friday to authorize plans for BellSouth’s $1.5 billion capital infusion into QVC’s bid, but no final agreement was signed. QVC had planned to announce its new offer Sunday or Monday, according to two executives in the QVC camp.
Several investment experts described Viacom’s move as savvy. “Whatever price QVC and BellSouth were thinking about on Friday is now out of date,” said one expert in mergers and acquisitions. “Now they have to rethink how much to offer.”
The move by Viacom’s chairman, Sumner Redstone, means that the bidding could escalate further, said one executive in the QVC camp, because it “suggests that Sumner is willing to do what it takes to get the company.”
Wall Street investment adviser George Kellner of Kellner DiLeo pointed out that Viacom’s offer expires Nov. 22, two days earlier than QVC’s offer, and has the support of both the Paramount board and federal regulators.
