Paramount Communications, Inc. v. QVC Network, Inc. case brief

Paramount Communications, Inc. v. QVC Network, Inc. (Del. 1994)

• Paramount wanted to merge with Viacom. QVC made a hostile bid, but Paramount gave Viacom advantages as its favored bidder (no-shop, termination fee, etc.)
• Paramount argues that Revlon does not attach because a breakup of the corporate entity is required.
• The court says that Revlon is triggered when a board enters into a merger transaction that will cause a change in corporate control, initiates an active bidding process seeking to sell the corporation, or makes a breakup of the corporate entity inevitable.
• The court held that there was a sale or change of control in this case, because the majority of the corporation’s voting stock was transferred from the fluid market into the hands of a single person or a cohesive group acting together.
  • It matters because it shifts all the voting powers from the diffuse group to the single person or controlling group.
• Under Unocal, Revlon, and Macmillan, the board’s actions fail the enhanced judicial scrutiny.
  
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