Shares of Paramount Global edged lower Thursday, day three in the red, amid lingering uncertainty around Skydance’s latest offer. With bigger than anticipated sweeteners for Class B shareholders, it was approved by Par’s special board committee and sent on to controlling shareholder Shari Redstone but with no announcement forthcoming.
Redstone controls Paramount through family holding company NAI, which owns about 80% of the company’s Class A voting shares. She’s always had the last word and Skydance wasn’t necessarily going to be an immediate slam dunk. But Deadline also hears Redstone continues to explore two other options as well as the Skydance offer that formally landed on her plate over the weekend.
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One of the two is a bid from an investor group led by Steven Paul. Deadline hears there is one other interested party. Both of those proposals — they may not be formal offers yet — would only involve acquiring Redstone’s controlling stake in NAI, no merger. It’s not clear if either is feasible or FCC compliant.
Separately, Sony, which is interested in a deal directly for Paramount, continues its due diligence.
Meanwhile, the tone and tenor of ongoing negotiations with Skydance aren’t clear but may be strained.
The last offer from David Ellison and backers Larry Ellison and RedBird Capital reduced the cash paid to Redstone for her NAI stake in order to put more of it into buying out, in part, Paramount’s minority shareholders. They had threatened to sue if Redstone received a big premium for her shares, while they got nothing for theirs, and then pushed through a dilutive acquisition of Skydance.
Paul’s group is said to be offering Redstone more than the $2.25 billion than Skydance did in its last offer, but less than $3 billion, according to Bloomberg. John Paul DeJoria, the billionaire co-founder of Patrón tequila and Paul Mitchell hair care products, told the outlet in an interview that he is among Paul’s group of wealthy investors making a run at Paramount. He seemed to have CBS News in mind, saying, “There is not one news station that’s non-political.” … “I can promote positive information on their stations. It’s a wonderful thing to be able to be a positive influence on everybody.”
Sony continues its examination of Paramount’s books. Last week, on the night of the Bad Boys: Ride or Die premiere — the same day Ellison revised his offer for Par — Sony Pictures Entertainment CEO Tony Vinciquerra told Deadline talks were “still progressing”.
Speculation abounds — that it may just be hard for Redstone to pull the trigger on a sale of the company her father built over decades, or that giving up mogul status is tough to do. She’ll will be showing up at Allen & Co’s annual Sun Valley retreat in July once again alongside Disney CEO Bob Iger, CAA’s Bryan Lourd, OpenAI CEO Sam Altman, Meta’s Mark Zuckerberg, Microsoft founder Bill Gates and more.
With all this in the background, an awkwardly timed annual meeting Tuesday saw Paramount’s new CEO trio (Brian Robbins, George Cheeks and Chris McCarthy) outline a strategy to go it alone and never mention M&A. Paramount did push a town hall meeting originally skedded for Wed. up by a few weeks hoping to give staff more clarity then than they can now.
Awkward moments are piling up. The three-member office of the CEO was announced as former CEO Bob Bakish was pushed out, which was the same day as a quarterly earnings call led by Paramount’s CFO where there was no mention of M&A and no analyst questions were taken, which is highly unusual.
As for Skydance, its revised offer tries to address concerns expressed by stockholders other than Redstone. Now she gets less and they get more. Specifically, the numerous holders of the non-voting Class B stock would be offered $15 a share for about half their shares if they want to sell. Class A shareholders would receive $23 a share, although there are relatively few of them besides Redstone with Mario Gabelli the biggest outside owner of voting stock.
The deal also calls for Paramount and Skydance to merge with Par acquiring Skydance in an all-cash transaction that dilutes current stockholders (as issuing new shares always does). So Skydance trimmed its own valuation here with the proposed cost of that transaction falling from $5 billion to $4.75 billion.
Skydance would also invest significant cash in the company.
Investors bid the stock up Monday on news of the unexpectedly sweetened terms for Class B shareholders and assumed a deal was imminent. The stock ended down about 1% today at $11.97 — off 6.5% from Monday’s close.
Deadline hears Redstone is considering holding a so-called “majority of the minority” vote for all shareholders (besides herself) to gauge their sentiment. An affirmative vote may be the one way she’d be able to fight eventual litigation that investors have warned of. So indemnification is an issue and Redstone might like Ellison to assume legal liabilities.
Shareholders may like the deal more more now but would still, most likely, not approve it.
It seems that Redstone could be in the clear legally by just selling NAI to someone for a big premium. That’s her right. The lawsuits would come from her merging CBS and Skydance as part of a transaction.
A “go-shop” period is also significant, some say. It would allow Par to consider better bids even after signing a deal. Even when a company has an agreement in place there’s a window when others can still jump in and offer more. Evaluating those if they come is part of a board’s fiduciary duty. One Wall Streeter speculated that’s what Apollo and Sony may be waiting for.
“My guess is the sticking point is that she wants him to assume backstop on any litigation,” this person said. “I am betting her attorneys are saying the only way for her to avoid litigation is to have the shareholder vote.”
“And if she signs a no-shop clause, she can’t shop the deal and that also opens her up to litigation because she hasn’t tried to get the highest value for shareholders.”
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