To the End of Time, by Richard M. Clurman
In the spring of 1989, a bitter takeover struggle broke out over Time Inc., the white-shoe publisher of celebrated American institutions like Time and Fortune magazines, latterly diversified into television programming and cable systems. The struggle was precipitated by Time Inc.’s own management. It accidentally put the company “in play”—to use the contemporary Wall Street jargon—by announcing an agreement to merge through an exchange of stock with Warner Communications, an upstart movie, record, and cable-TV conglomerate with a decidedly unwhite-shoe image and a colorful and controversial chief executive, Steven J. Ross.
This attracted Paramount Communications, another movie and publishing conglomerate, which intervened with a takeover bid for Time Inc. itself. The Time Inc. management knew that its company’s shareholders would probably prefer Paramount’s ready cash to the combination of stock and hypothetical future advantages of the proposed merger. So it borrowed several billion dollars to buy Warner outright, at a 55-percent premium above what Warner stock had been trading in the market. Unlike the stock swap, this move did not require shareholder permission—at least arguably.
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