Word: warners
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Dates: during 1980-1989
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Paramount's tender set the stage for a clash of media titans that could lead to months of multibillion-dollar broadsides, legal pyrotechnics and dangerously unpredictable consequences. The Paramount bid came just 2 1/2 weeks before shareholders of Time and Warner Communications were to vote on merging their firms into the world's largest media company, with total revenues of $10 billion. But the sudden strike by Paramount, whose operations include one of Hollywood's top movie-and-TV studios and the giant publishing house Simon & Schuster, disrupted those plans and threatened to provoke a free-for-all in which...
...arbitragers, who snapped up Time stock in the belief that Paramount would prevail or attract other bidders into the fray. Time shares skyrocketed from 126 to 170 on Wednesday and finished the week at 170 1/4. Since Wall Street investors considered all three companies now to be in play, Warner stock jumped to 56 1/8, up 4 points for the week, and Paramount rose...
...Time was worth more in pieces than whole. Since the merger agreement was reached on March 3, some investors had complained that the terms provided Time shareholders with no immediate financial reward. Reason: the agreement called for a debt-free swap of 0.465 shares of Time stock for each Warner share...
...arrangement would give Warner stockholders a premium, reflecting the fact that in effect Time was acquiring a slightly larger company with many more outstanding shares, but would leave Time's stockholders with only the prospect that their stock would appreciate over the long run. Moreover, the process of getting Government approval and working out legal details required a 3 1/2-month gap between the announcement and the stockholders' vote on the deal, which left enough time for a hostile bidder to marshal his forces...
...those who admired the Time-Warner deal, an old-fashioned debt-free and tax-free stock swap between friendly companies, the Paramount bid raised disturbing doubts about whether corporate America can free itself from the frenzied deal making, staggering debt loads and ultimate dismemberment that have plagued U.S. industry in the 1980s. Among other considerations, the absence of heavy leverage in the Time-Warner arrangement was aimed at helping the merged company compete globally against such foreign media giants as West Germany's Bertelsmann and France's Hachette...