Midway Takeover Looking More Likely?

Thanks to GameSpot for its article discussing Viacom CEO Sumner Redstone's increasing financial stake in publisher Midway, as he "has hired a financial advisor to evaluate options should he increase his interest in the publisher to 80 percent of its common stock", and also "nominated his daughter, Shari E. Redstone, to join the board" The piece also notes: "In spite of the stock reporting 17 consecutive quarterly losses, Redstone has demonstrated unflagging interest in the company, increasing his stake in it from less than 30 percent at the beginning of the year to its current level", and goes on to speculate: "A survey of analyst's comments... suggest a timeline that would see Redstone acquire sufficient Midway stock to take the company private, to be followed by the sale of the company to Viacom. Such a scenario would give Viacom the means to enter the game space through the Midway Games infrastructure [as opposed to the rejected concept of an EA takeover.] Viacom could then leverage its many brands--including MTV and Nickelodeon--to become a significant publisher."

Comments

interesting, but likely?

[bigbigbison]

It seems odd that the CEO of Viacom is the one buying the stock rather than the company of Viacom itself. I don't know a whole lot about such matters, but it would seem that the CEO buying enough of a company to take it private and then sell it to the company that he already owns seems either a bit of a round-about way of doing it or just downright illegal (He buys it cheap and then sells it to the company he already runs for a lot more? Wish I could do that). I wonder if it might be something more like a fall back job for when he inevitably gets fired from Viacom (as all CEOs seem to eventually do).

Re:interesting, but likely?

[Colazar]

Most likely there are tax or legal reasons for structuring it this way.

Or maybe time is of the essense and its faster/easier to work it out as a private purchase first, and after that they can dot all the i's and cross all the t's to get it to the final structure they want.

Redstone has such control of that board, I don't think corporate politics comes into it.