PARAMOUNT COMMUNICATIONS INC. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Paramount Communications Inc Case Study Solution

Redstone shouldconsider the last option because it is more feasible in terms of financial as well as ownership viewpoint. The stock and cash option is feasible, because the offer will become attractive and will not require a huge amount at the same time. It carries less risks as the risks will be divided into two parts- cash and stock. On the other hand, the percentage of stock purchase will generate increased revenues and dividends in future. The sense of ownership will be obtained to access their rights within the organization. The synergies for both the companies are attractive because both are branding players in the market without any competitors. So, they together could generate an ever flourishing revenue income. The 70% stock and 30% cash option is also very attractive, because Redstone will have to pay less cash and will give remaining payment in stock. The price for the stock will increase eventually. The “Lock-out” option and termination in itself is a big challenging situation, because it leads down to pay $150 million, with an increased expense being incurred. Redstone should reject this offer, because the stock and cash purchase is a good option that is available. Additionally, the other option will yield maximum returns as compared to the lock-out option.

Question: 11

Redstone- Active Buyer

Redstone acquiredvoting class A common stock and nonvoting class B common stock of about 45.5 million shares and 46.6 million shares respectively in 1993. Redstone had put many hard efforts to restructure the company,and was very well aware about the acquisition offer from Paramount. He became an active buyer to retain the voting right for this offer by himself.(C Ellegaard, J Johansen, A Drejer, 2003).

Question: 12

Why Following M&A Transactions

The market expectation has been calculated with the help of overlapping, which resulted after the merger of Paramount and Viacom. The analysis revealsthat9% overlapping has been measured between Paramount and Viacom, which is representing a $595 million overlap. This shows that both the companies are complimentary for each other, and in unity they can perform at higher level. On the other hand, Paramount and QVC commination reveal that only 3% overlapping could be possible.(See appendix 2). The analyzation of the merger’s profitability is very important,becausethe investors will show more concern and will invest more as the company’s size will be increased. The world’s largest entertainment conglomerates could be developed by merging these two giants- The Viacom and The Paramount, because both could hold a huge market share in the entertainment industry if they are unified. Viacom-Paramount could reach to every area on the earth, because it has an ability to produce and create programming easily along with a massive distribution skill.

Conclusion

The entertainment industry has been ruled by three giant companies- Viacom, Paramount and, QVC. The entertainment business has been divided into two main parts; television and film. Redstone and Martin S. Davis have to decide upon the possible options available for Viacom-Paramount merger along with taking a calculative decision regarding the terms and the price being paid. The stock and cash option are feasible, because the offer will become attractive as it will not require huge amount at the same time. The sense of ownership will be obtained to access their rights within the organization. The analysis reveals that 9% overlapping has been measured between Paramount and Viacom, which represents $595 million overlap. This shows that both of the companies are complimentary for each other and can perform at higher level when operate together...................................

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