Paramount Special Committee Extends Skydance 'Go Shop' Period Amid Bronfman Offer Review
The future of Paramount Global hangs in the balance as the company navigates a complex web of merger offers. On Wednesday, Paramount’s special committee announced a significant move: it would extend by 15 days the pre-agreed “go shop” period of its merger deal with Skydance. This decision comes as the committee meticulously assesses a competing bid from Edgar Bronfman Jr.
Bronfman initially entered the fray late on Monday, presenting a $4.3 billion offer for Shari Redstone’s National Amusements, the controlling shareholder of Paramount. As part of this initial bid, Bronfman aimed to acquire a minority stake in Paramount. However, in a strategic maneuver, Bronfman subsequently raised additional funds to bolster his offer. An anonymous source, privy to the details of the bid, disclosed that Bronfman had upped the ante.
Sure enough, on Wednesday, Bronfman submitted a revised and enhanced offer of $6 billion. This new bid is clearly designed to eclipse Paramount’s existing merger agreement with Skydance Media, which was finalized in early July after months of intense negotiation. That initial agreement incorporated a 45-day “go shop” window, during which Paramount was permitted to seek out other potential offers.
A representative for Bronfman opted to remain silent when approached for comment.
The special committee, on the other hand, publicly confirmed “the receipt of an acquisition proposal from Edgar Bronfman, Jr., on behalf of a consortium of investors.” In a formal statement, the committee elaborated, “As a result, the ‘go shop’ period is extended for the Bronfman Consortium until September 5, 2024, pursuant to the transaction agreement to which the Company remains subject. There can be no assurance this process will result in a Superior Proposal. The Company does not intend to disclose further developments unless and until it determines such disclosure is appropriate or is otherwise required.” The committee also revealed that during the initial “go shop” phase, it reached out to over 50 third parties to gauge potential acquisition interest. However, it was quick to note that for all other parties, the go-shop period would still conclude before midnight on Wednesday.
The Skydance buying consortium, which comprises private equity firms RedBird Capital Partners and KKR, had previously agreed to pour more than $8 billion into Paramount and acquire National Amusements. Under this deal, National Amusements would command an enterprise value of $2.4 billion, with $1.75 billion in equity.
As part of the Skydance deal, Paramount’s class A shareholders were set to receive $23 each in cash or stock, and class B shareholders would get $17 per share, amounting to a total cash consideration of $4.5 billion available to public shareholders. Skydance also committed to injecting $1.5 billion of capital into Paramount’s balance sheet. National Amusements currently holds 77% of Paramount’s class A shares and 5% of class B shares. If the Skydance transaction were to close, it would gain full ownership of class A Paramount shares and 69% of the outstanding class B shares.
Bronfman’s initial bid proposed an equity deal to purchase National Amusements, valued at $1.75 billion. This offer mirrored the Skydance deal in some respects, including a $1.75 billion investment into Paramount’s balance sheet and covering the $400 million breakup fee that Paramount would owe Skydance if it backed out of the deal, according to the insider source.
The sweetened bid on Wednesday now incorporates a $1.7 billion tender offer, providing non-Redstone, nonvoting Paramount shareholders with the option to receive $16 a share. Bronfman, a seasoned industry figure, previously led Warner Music and liquor company Seagram and has served as executive chairman of Fubo TV since 2020. The details of his bid were first reported by The Wall Street Journal.
The merger agreement between Paramount and Skydance has not escaped scrutiny. Money manager Mario Gabelli reportedly filed a lawsuit demanding Paramount turn over its books related to the Skydance deal — a possible precursor to a legal challenge. Investor Scott Baker also reportedly sued to block the deal, arguing it would cost shareholders $1.7 billion. In conclusion, the extended “go shop” period signals Paramount’s commitment to exploring all available options to maximize shareholder value. With Bronfman’s aggressive bidding and the existing Skydance deal on the table, the coming weeks will be crucial in determining the ultimate fate of Paramount Global. The legal challenges further add to the complexity, making it a high-stakes drama that will continue to unfold in the corporate arena.