Buyout bid for QVC sweetened


In a deal aimed at putting the cable television magnate John Malone on its team, Comcast Corp. has made Liberty Media a partner in its takeover bid for QVC Inc., the cable television home shopping company.

The two companies said yesterday that they would offer $44 a share in cash for QVC's outstanding shares.

Comcast, on its own, had offered $44 a share last week. But that offer was seen as less attractive than the new one because it included $37 a share in cash and $7 in Comcast's preferred stock.

QVC Chairman Barry Diller said yesterday that his company would consider the offer while seeking higher bids. But several media analysts said they thought the Comcast-Liberty offer had a good chance of being approved.

Mr. Diller, who stands to make $100 million on the sale of QVC, is expected to leave the company regardless of who acquires it.

The addition of Liberty Media Corp. to its team is significant for Comcast, not only because Liberty is QVC's largest shareholder but because Mr. Malone controls Liberty.

Mr. Malone, who wields significant power in cable television because he controls the industry's largest company, Tele-Communications Inc., was said to be unhappy with Comcast's original offer because of the potential tax consequences for Liberty Media.

And some industry executives had thought he might even oppose the bid by Comcast, which is the nation's No. 3 cable company and QVC's second-largest shareholder.

Jessica Reif, who follows cable for the investment firm Oppenheimer & Co., said she thought that yesterday's offer would be a far better deal for Comcast.

Compared with its earlier offer, she said, Comcast would be putting up less of its own money but would still control the company, owning 57.5 percent.

Liberty would own 42.5 percent, without putting up any additional money. Most of the additional funds would be raised through borrowing by QVC.

The new bid would essentially take the company private in a deal that would bear some resemblance to a leveraged buyout, in which a buyer acquires a company by borrowing money against the assets and cash flow of the target company.

In this case, the buyers are Comcast, which already owns 15.5 percent of QVC, and Liberty Cable, which owns 19 percent. If no other offers materialize and the QVC board accepts the bid, Comcast would manage the company and Liberty would be the minority partner.

The deal would mean that QVC's owners would be two of the nation's three largest cable operators, insuring that its service would continue to be widely available.

John Tinker, a cable television analyst at the investment house Furman Selz & Co. said the deal reflected the cable industry's de termination to control programming.

"QVC is too important an asset for the cable industry not to want to control it," he said.

When Comcast first made its proposal, Mr. Malone was said to be unhappy with the deal's structure because of the tax consequences to Liberty. Liberty originally paid very little money for its stake in QVC, and Mr. Malone did not want Liberty to pay a heavy capital-gains tax after selling out to Comcast.

The restructured offer would avoid that problem, since Liberty would not sell its QVC stock.

At $44 a share, the total purchase price is $2.2 billion for roughly 52 million shares of QVC stock.

Comcast's 8.7 million shares would be valued at $382 million. Liberty's 10.2 million shares would be valued at $450 million. Those two stakes are worth $832 million.

To pay for the balance, QVC would borrow $1.1 billion and Comcast would put up $258 million -- which would include $29 million for exercising Comcast warrants in QVC that must be converted to common stock.

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