Word: mergers
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...bold architects of the $33 billion deal, the largest communications merger in American history, with prospects of creating a corporate colossus extending telephone and cable-television wires into roughly one out of every four American households, simply got cold feet. And it was more than government regulations that pulled them apart. The price of their stocks was plunging, and doubts about the economic wisdom of the merger were on the rise. And the deal may have been too big and too hasty. Wall Street reacted with a 51.78-point drop in the stock market on Thursday...
...merger had been tottering for weeks. Three deadlines for a definitive agreement had already come and gone. The big problem was the slumping value of Bell Atlantic stock, which had dropped from 67 5/8 on Oct. 14 to 52 3/4 the day the deal collapsed. That was uncomfortably below the $54 a share that Bell Atlantic had pledged to pay for TCI. Malone, whose personal stake would have been worth more than $1 billion under the merger agreement, demanded more Bell Atlantic shares to offset the decline in price. But Smith, who noted that issuing more stock would dilute...
...left Viacom with $10 billion of debt and exacted a heavy toll on the company's shareholders and allies. Redstone concedes that the battle forced him to cough up some $1.5 billion more than he intended to pay when Viacom and Paramount unveiled their original merger agreement last Sept. 12. Since then the price of Viacom Class-B stock has shrunk more than 50%, falling from 56 3/4 to 25 3/4 last Friday as investors reckoned that the cost ! of the merger would hammer the company's profits for years...
Viacom couldn't afford to let Blockbuster get away, because Redstone needed the video chain's financial clout to defeat Diller and then help pay interest on the debt after the Paramount merger. So Greenhill, whose firm earned $12.5 million for advising Viacom, resorted to a game of high-stakes financial chicken. He allowed the Blockbuster talks to break off rather than accede to Berrard's demands. At the same time, Greenhill instructed Levitt to maintain contact with his pal Berrard. The strategy paid off on Christmas Day, when Levitt, calling from New Jersey on his Jeep Cherokee car phone...
...start talking again to Viacom. The upshot: Viacom finally agreed to a revised collar that would compensate Blockbuster shareholders for any drop in Viacom stock over a one-year period. That satisfied Blockbuster, which had originally insisted on compensation for any stock drop at the closing of the merger...