Tuesday, April 21, 2009
Paramount v. QVC is a lot like Paramount v. Time, and the decisions are entirely consistent: Paramount always loses. Beyond that, it is hard to say what principles are operative here. In this case, Paramount was trying to protect a friendly merger with Viacom and fend off a hostile offer from QVC. Viacom and Paramount agreed to the usual array of defensive measures and treated QVC disdainfully. Sounds a lot of like the way Time treated Paramount.
This time, however, the Delaware Supreme Court enjoined the key defensive measures. Because Viacom's chief, Sumner Redstone, was a controlling shareholder and would be so in the newly combined entity, this transaction contemplated a change in control, an element missing from the proposed Time/Warner merger. This difference necessitated the imposition of Revlon
duties, so Paramount could not engage in defensive measures that shut down an active bidding process.
Paramount v. QVC
The Court invokes the old adage;
We expect that managers manage.
But Boards must patrol:
Where there's loss of control,
Shareholders must win some advantage.