Word: paramount
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...merger also gave Redstone extra cash, which he had been desperately seeking, to use in the battle for control of Paramount. Reinforced by Blockbuster's huge cash hoard and rock-solid balance sheets, he immediately upped his offer for Paramount by $1.2 billion. "It may not be the knockout blow," said an obviously pleased Redstone, "but from our standpoint it is an extremely dramatic coup." Both Redstone and Huizenga insisted that the merger had been in the works for months and would go forward whether or not the company gained control of Paramount...
...produced a bid that was considered by many analysts to be not only anticlimactic but also inferior to Diller's current offer. Though the offer is a complex blend of stock and cash, the estimated value of the Viacom-Blockbuster package is around $79 for each share of Paramount stock, in contrast to QVC's $82 a share. The main difference between the two bids -- and what Redstone is counting on to make his offer more attractive -- is that Redstone's package contains slightly more cash than stock...
...Despite the questions swirling around the merger, the new offer is enough to prolong the contentious five-month battle for control of Paramount and cast renewed uncertainty over its outcome. With his latest parry -- even if it turns out to be as ineffectual as Diller thinks it is -- Redstone has for the moment denied QVC's chairman the prize he so eagerly desires. Diller, Redstone and Paramount CEO Martin Davis have been locked in combat since September, when Viacom agreed to buy the movie studio for $8.2 billion in a friendly deal. Soon after that agreement, Diller launched...
...possible answer is that Redstone and his advisers believe that shareholders will not only appreciate the larger cash component of their offering but will also be swayed by future profit possibilities. Some analysts maintain that Redstone's combination will indeed offer far more synergy than QVC and Paramount. Says Chris Dixon, an analyst at Paine Webber: "It's hard to imagine what business opportunities exist between QVC and Paramount that can match Viacom, Blockbuster and Paramount...
Either way, the eventual winner of Paramount will probably have paid an astonishingly high "ego premium" to secure the prize. That premium has been variously estimated at somewhere between $1 billion and $2 billion more than Paramount is really worth...