Newspaper article St Louis Post-Dispatch (MO)

Viacom Set to Acquire Paramount Merger Would Be Largest since Time-Warner Deal

Newspaper article St Louis Post-Dispatch (MO)

Viacom Set to Acquire Paramount Merger Would Be Largest since Time-Warner Deal

Article excerpt

Paramount Communications Inc. and Viacom Inc. were expected to announce a deal Sunday in which Viacom will acquire Paramount for $69 a share in stock and cash. Both boards are expected to approve the deal at midday, sources close to the negotiations said Saturday.

The transaction has a market value of $8.28 billion, making the merger of the two New York City-based media companies the largest after the $14 billion marriage of Time Inc. and Warner Communications in 1989.

Although each company is already a power, the merger would create a more viable force on a field increasingly ruled by giants like Time Warner, Sony and Capital Cities/ABC.

The new company would have a market capitalization of roughly $17 billion, with about $2.4 billion in debt. That would put it in a stronger financial position than companies like Time Warner, which has a market capitalization of $25 billion but about $11 billion of debt.

The new company also would control both the production and distribution of entertainment programming. The film studio Paramount Pictures, for example, could produce movies for Viacom's Showtime movie channel that could be distributed on Viacom's cable systems.

Under the deal, for each of Paramount's 120 million shares, Viacom will pay 0.1 share of its class A voting stock and 0.9 share of its class B nonvoting stock, as well as $9 a share in cash, making the cash component roughly $1 billion.

The Viacom stocks closed respectively on Friday at $66, and $59.375, on the American Stock Exchange. Paramount closed at $61.125 on the New York Stock Exchange.

The purchase price is far higher than most analysts had expected. They had anticipated a value of no more than $65 a share.

Additionally, the deal will leave the chairman of Viacom, Sumner M. Redstone, with 70 percent of the company's stock vote, far more than analysts had expected. …

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