CVR's add to the mix a security blanket for the selling company and a big risk for the buying company.
6. Why did QVC change its final bid the way it did?
On January 21, Lazard Freres put forth that both the QVC and Viacom offers were fair, but that the Viacom offer was marginally better than the QVC offer. This information led QVC to change its final bid. They increased the price for 50.1% of Paramount's shares to $104 per share. It revised the Third QVC Second-Step Merger by providing for the exchange of a) 1.02361 shares of QVC Common Stock, b) .2386 shares of New QVC Merger Preferred Stock, and c) .32 ten-year warrants for each remaining Paramount share. QVC did this to try and make their offer more attractive than Viacom's offer. Basically QVC had increased the cash portion of its offer from $92 to $104 per share while reducing the stock portion to keep the total value unchanged and without matching Viacom's collar. Viacom also sweetened their securities portion of the deal while keeping the cash portion unchanged. Though the exact value of each offer was hard to ascertain it was estimated that both hovered above $10 billion. Both companies had seemed to loose site of price and where only concerned with winning.
7. Which of the two final bids is more attractive...
If it had been me I would have accepted the Viacom bid as well. The specifics of each deal were relatively the same in the end with both being valued at over $10 billion. Although each deal had its own nuances, I don't think that either was any more spectacular than the other. Sometimes you have to look beyond the numbers and consider other factors, especial the social issues that are at play. Both of these offers ended up being well above the initial bid that Viacom had placed in their friendly takeover. Somewhere the parties involved seemed to loose sight of what was really good for all the companies involved and it became something personal between the powers that were in charge.
My acceptance of an offer would have looked at these other factors and not just the monetary value of each deal. Since Viacom had come into the whole situation on a friendly basis and QVC had not, I would tend to think that Viacom would be the better choice with the reasoning that they were on the same page as Paramount and really wanted what was best for both companies. Sometimes…
