Word: paramount
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...move was calculated to turn up the heat on Time, which had rejected Paramount's initial bid two weeks ago and instead pressed ahead with its planned merger with Warner Communications. To that end, Time and Warner on June 16 converted their original debt-free stock swap into a leveraged takeover bid in which Time would buy Warner for a total of up to $14 billion in cash and securities, a step that, among other things, eliminated the need for the deal to be approved by Time stockholders...
...letter last week announcing the upgraded offer to Richard Munro, chairman of Time, Paramount Chairman Martin Davis said he hoped "that your board and management will now discontinue your efforts to preclude stockholder choice and give Time's shareholders an opportunity to consider our offer." Time promised to consider the new bid "in due course" and advised its stockholders "not to act on the offer until they hear from Time...
...share offer is certain to be welcomed by money managers and shareholders who had chafed at Time's rejection of the original Paramount bid. Said Paul Kagan, head of Paul Kagan Associates, a California-based firm that follows the media industry: "It will be very hard for management to tell stockholders that they can't have the $200. This is a large price for Time stockholders who have waited a long while for prices to approximate the real value of their stock." Time shares closed Friday at 165 7/8, up 10 1/2 for the day, in response to leaked reports...
Some experts viewed the Paramount tactic as a move to buttress its position in Delaware chancery court, where Paramount contends that Time is in effect interfering with its shareholders' desire to tender their stock. "This will add a notch to Paramount's legal argument, but it will only put pressure on Time if 70% to 90% of its shareholders tender their stock to Paramount," said Jeffrey Greenblatt, a partner in Cambridge Capital Holdings. "Time does not have to take any new defensive steps," he added, "because there is no threat that Paramount will be able to acquire Time's stock...
...Paramount were in fact successful, the deal would leave it with a heavy debt burden. Although Davis has vowed he would not dismember Time after an acquisition, the pressure to sell assets might grow in response to the need to make large interest payments. In raising the stakes, Paramount acknowledged that its takeover proposal is conditional to, among other things, Time calling off its acquisition of Warner and rescinding the share exchange already executed and on Paramount's ability to obtain adequate financing. To cover the cost of acquiring Time's stock and meet merger-related expenses, Paramount said...