PARAMOUNT 1994 CASES IN CORPORATE FINANCE July 12‚ 2013 Board of Directors Paramount Re: Acquisition Dear Board of Directors: In order to make our recommendation to the Board‚ we must address the following questions: Acquiring Paramount Communications‚ Inc (PCI) was important for Redstone as it would enable Viacom to obtain a stronger position in the communications industry. His initial offer was designed to show that Viacom was a better strategic
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Xavier Perry 5/22/2015 Section B Takeover (2) In a globalized world‚ learning a foreign language has become increasingly important. Do you agree or disagree? Explain your answer‚ and use facts‚ statistics and studies to supplement your views. Learning a foreign language has become almost a necessity in today’s modern society.Technological advances have greatly increased our ability to being able to connect with a vast array of different people from different parts of the world. Millions
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Paramount 1994 1.) On December 14‚ Paramount’s board dropped the merger agreement with Viacom and agreed to hold an auction for control of Paramount. The implication of this move was that although Paramount would endorse one of the two bids‚ the shareholders’ tender decisions ultimately would decide the winner. 2) 3.) (Refer Chart “Stock Price Movements” in appendix.) Before the announcement‚ (on September 7)‚ Paramount stock traded at $55.875 per share. From that point‚ Paramount stock reached
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E N E T ® Paramount Communications Inc.–1993 Steven N. Kaplan University Of Chicago A t the end of August 1993‚ Sumner Redstone‚ Chairman of the Board of Directors of Viacom‚ sat back and wondered what to do about Paramount Communications. He had been pursuing the acquisition of Paramount for some time but seemed to have reached a road block. Beginning in 1989‚ Redstone and Martin S. Davis‚ Chairman of the Board and Chief Executive Officer of Paramount‚ had held informal discussions
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Case Study Questions –Paramount Communications Inc. 1993- Why a paramount is a takeover target? Several Strategic Reasons - Cost reduction: through combinations of similar business and economy of scales - Sales increase: a) cross-promotions of each company’s brand and utilization of each company’s channels‚ and b) cooperation in international businesses. 2. Which of the two firms (Viacom or QVC) would make a better fit with Paramount? -Viacom: Overlap in the business creates
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1. WHY IS PARAMOUNT A TAKEOVER TARGET? Paramount is a potential merger target to Viacom and QVC for a few key reasons outlined below: Paramount & Viacom: (1) Synergy creation: The businesses of both companies are famous and highly complementary to each other. (2) Cost reduction: Paramount & Viacom both have economies of scale and are doing business in a similar industry. (3) Addition of enhanced and complementary distribution capabilities‚ which will significantly increase revenue. (4)
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Hostile takeovers vs. friendly takeovers Emma Lilja‚ Adeniyi Ajayi‚ Andreas Thomasson‚ Mahfuj Khan‚ Nayeem Rahman and Mohammed Kalam Andreas Stenius‚ Arcada - University of Applied Sciences 8.5.2012 Degree Programmes: International business and Financial Management. Course name: Corporate Structures Executive Summary This project report provides comprehensive information about corporate structures; focusing on friendly and hostile takeovers‚ introducing them through definitions and some
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MCI Takeover Battle: Case analysis questions 1. What are the strengths and weaknesses of Verizon‚ MCI‚ and Qwest? Where are the synergies in the proposed combination? 2. Evaluate the two offers in Exhibit 7. What explains the two structures? In each case‚ what is the value to MCI shareholders? 3. Merger arbitrage (or risk arbitrage) funds speculate on the completion of stock and cash mergers‚ typically buying the target and hedging the risk of the acquirer’s shares accordingly to exchange ratio
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Paramount Communications Inc. Question 1 Paramount is a takeover target because other firms see synergy value associated with combining Paramount’s assets and operations with their own. Specifically‚ Paramount has several assets that complement other media companies. Value in the media is generated through several different channels. As a media company‚ Paramount has a presence in most of the entertainment sectors (see Exhibit 2). There seems to be a drive toward consolidation and several industry
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1) Why is Flagstar in financial distress? When possible‚ back your claims with data. Signs of financial distress • The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1‚ we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at
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