Paramount 1994 What Do You Essay

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For Paramount, the price of the stock increased from $52.00 to $83.00. Between November 24 and January 7, Viacom would trade in a price range of $46.25 to $51.00 for the class A shares. While, the class B shares traded between: $41.00 and $46.25. At the same time, QVC traded from: $39.25 to $46.50. In the case of Viacom and QVC, they are range bound based upon the uncertainty of the deal going through, with shares fluctuating to the higher end of the spectrum based upon these changes occurring. ("Paramount Communications," 1994)

What do you think of the plan by Viacom's investment bankers to use CVRs? What do the CVRs add to the mix?

The use of CVRs was a brilliant strategy to sweeten the deal for Paramount shareholders. What they are adding to the mix is the potential for them to receive an even greater price appreciation if they accept the offer. ("Paramount Communications," 1994)

What did the changes in QVC's final bid accomplish?

QVC increased the total price of the offer for Paramount shareholders.

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As they added a number of different elements including: a greater percentage of common stock conversion, the use of preferred stock and warrants. ("Paramount Communications," 1994)

Which of the two final bids is more attractive at the current stock prices of QVC and Viacom? Which of the two bids would you accept? Why? Is there any way you can use the current and/or past stock prices to figure this out? Think of how the stock prices of QVC, Viac-om, and Par-amount will change when it becomes clear who will win.

The Viacom bid, offers greater valuations for the shareholders of Paramount. The bid that I would accept would be that of Viacom. The reason why, is because they offer a greater initial return to investors. Yes, you can look at what is being offered from Viacom and QVC. At which point, you can compare which offer will provide the greatest short- and long-term benefits. The prices for QVC and Viacom began to decline, once it was obvious that a clear winner.....

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