Word: paramounts
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Dates: during 1980-1989
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Circling each other warily, always on the lookout for decisive openings, Time Inc. and Paramount Communications engaged in a fresh round of legal and financial swordplay last week. No clear winner emerged in the epic duel, but the thrusts and parries offered Wall Street speculators plenty of titillation -- and uncertainty. Time's board started off by rejecting Paramount's sweetened takeover bid, in which the company raised its offer for Time from $175 to $200 a share, or a total of more than $12 billion. The Time directors reiterated their plan to go ahead with an acquisition of Warner Communications...
Others expressed anger that the Time directors had refused to go along with the Paramount bid, which could deliver a windfall to Time stockholders. There were also expressions of concern about the debt of up to $14 billion that will burden the Time-Warner combination. Although the initial merger deal had been hailed for being debt-free, Time Chairman J. Richard Munro argued that the cash flow of the two companies will be adequate to service the debt. "We hope we can avoid layoffs and asset sales," he said. "The best way to pay off the debt will be through...
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...
Outraged by industrial accidents and financial misdeeds, activists demand a more responsible corporate America. -- Paramount boosts its bid for Time Inc. to $12 billion...