Paramount wasted no time Wednesday suing Time and Warner in Delaware Chancery Court to halt an exchange of stock that might make the Paramount takeover bid prohibitively expensive. Paramount also challenged Time's so-called "poison pill" plan and asked the court to rule that Paramount's offer to acquire Time does not constitute an unlawful interference with Time's contract with Warner. The judge delayed hearing the case until Friday.
In New York, meanwhile, Warner sued Citibank seeking $1 billion in damages and an injunction barring the bank from providing financing to Paramount. In its suit filed in the state's Supreme Court, Warner alleged that it asked Citibank on March 4 to agree not to participate in an unsolicited or hostile tender offer for Time or Warner, in exchange for Warner promising to "continue its banking relationship with Citibank."
According to the lawsuit, Citibank agreed and said in writing on March 8 that it would refrain from such action for 90 days.
Although the 90-day agreement appears to have expired on June 6--the very day Paramount announced its bid--Warner attacked the integrity of the bank's dealings by alleging that Citibank's "discussions and negotiations took place within the 90-day period."
Efforts to reach a Citibank spokesman late Wednesday were unsuccessful.
Time shares closed just $5 shy of Paramount's bidding price. One trader suggested the market hesitated to go higher because investors fear Time really will proceed with a tender offer for all or part of Warner, with a resulting tumble in he value of Time shares.
Speculators also may be hesitating to drive the price higher because any new deal for Time likely would require three or four months to secure regulatory approvals from federal and local governments, as the Time-Warner deal recently demonstrated.
There were hints Wednesday that Warner and Time will take their battle to Washington to protest the sale of yet another American corporation through the assumption of debt that might--despite Paramount's protests to the contrary--require sale of some assets.
But some of the very politicians who supported the Time-Warner deal may have trouble opposing Paramount if it argues that it can keep Time's assets intact. In an interview late last week, for example, Sen. Pete Wilson (R-Calif.) said he supported Time-Warner because the deal would not likely result in massive layoffs in Southern California and the combined company would continue to be managed by executives from the entertainment and media fields.
Wilson, when asked how he would view a bid from an entertainment conglomerate other than Warner, replied: "That's a different situation." The senator was not immediately available for comment Wednesday.
Time Stock Soars:Daily closing price per share, in dollars Wednesday close: $170, up $44