Corporations Keyed to Klein
Paramount Communications, Inc. v QVC Network, Inc
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- Topic: Identifies the topic of law and where this case fits within your course outline.
- Parties: Identifies the cast of characters involved in the case.
- Procedural Posture & History: Shares the case history with how lower courts have ruled on the matter.
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- Brief Facts: A Synopsis of the Facts of the case.
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- Facts: What are the factual circumstances that gave rise to the civil or criminal case? What is the relationship of the Parties that are involved in the case. Review the Facts of this case here:
Paramount was looking for possible merger or acquisition targets in order to remain competitive in their field. The CEO of Paramount had a meeting with the CEO of Viacom wherein they discussed Paramount merging into Viacom. The discussions hit a dead end until QVC sought to acquire Paramount. The discussions between QVC and Paramount were renewed, and the parties entered a merger agreement that had several defensive measures to prevent other companies, namely QVC, from bidding against Viacom. There was a no-shop provision that prevented Paramount from soliciting other bidders; a termination fee provision that paid Viacom $100 million if they were eventually outbid; and a stock option provision that allowed Viacom to purchase 19.9% of Paramount’s shares at $69.14 per share. The stock option provision also allowed Viacom to pay for the stock in subordinated notes or Viacom could elect to get a cash payout for the difference between the option price and market price. The st ock option was significant because Paramount’s shares rose sharply and would have led at one point to a $500 million payout to Viacom if the merger fell through. QVC started bidding against Viacom’s offer which forced Viacom to renegotiate with Paramount to raise their offer – although the defensive measures were never renegotiated. QVC raised their offer even further, but the Paramount believed that the offer was too conditional (similar to Viacom’s offer, it was two-tiered) and the board still felt that the merger was not in the company’s best interests. Therefore, the Paramount board turned down a QVC offer that could have been about $1 billion more than Viacom’s offer. In the lower court, Plaintiffs successfully enjoined Defendants from carrying out the merger agreement.
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