Richard Munro, President and CEO of Time Inc., faces a hostile takeover bid from Paramount Communications. Paramount conditioned its offer to cancel Time’s plans to merge with Warner Communications. A few months before Paramount’s hostile bid, Time had announced its plans to merge with Warner after carefully sifting through a full list of potential partners, including Paramount. The board supported Munro’s decision to merge with Warner as the two companies had a wide range of complementary assets. If Time went ahead with its plans to merge with Warner, Time shareholders would give up at least $ 175 per share in cash and possibly more. On the other hand, a merger with Paramount was not part of Time’s long-term strategy. Munro must recommend a specific course of action to the board at its emergency meeting. The case is written from the perspective of time managers. Should Time managers oppose Paramount’s offer?
Harvard Business School (293117-PDF-ENG)
April 14, 1993
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