Even after clinching a deal with Skydance Media, Paramount Global has the right to shop around for a better offer in a 45-day window. But if Paramount agrees to accept a more attractive buyout deal, it would be on the hook to pay Skydance a $400 million breakup fee, David Ellison, founder and CEO of Skydance, told investors on a call Monday morning.
Under agreement with Skydance and financial backer RedBird Capital Partners, the special committee of Paramount’s board of directors has a 45-day go-shop period during which it will be permitted to “actively solicit and evaluate alternative acquisition proposals.” According to Paramount, it “does not intend to disclose developments with respect to the go-shop process unless and until it determines such disclosure is appropriate or is otherwise required.”
The “go-shop” provision of the deal was agreed to by the Skydance team in lieu of giving Paramount Global’s nonvoting shareholders approval over the deal. The 45-day window is seemingly intended to minimize the threat of shareholder litigation against the Paramount board and Shari Redstone’s National Amusements Inc., which owns the controlling voting stake in Paramount, by showing that they made good-faith efforts to maximize the value of any M&A transaction.
The $400 million breakup fee is “unusually large” for a deal of this size and “would give credence to a shareholder claim that the go-shop provision adds no protection to shareholders who claim that Redstone is getting the better of them,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.
Also on the call with investors Monday, Jeff Shell, chairman of RedBird Sports & Media and former CEO of NBCUniversal, said the Skydance team has identified more than $2 billion in cost-savings annually, including more than $1 billion in the first year. Shell is set to become president of the “New Paramount” once the deal closes, expected in the first half of 2025.
Under the two-step Skydance-Paramount deal, Skydance will acquire Redstone’s National Amusements Inc., which holds a 77% controlling stake in Paramount; subsequently, Skydance will merge with Paramount Global. The Ellison family and RedBird Capital said they will invest up to $6 billion into the “New Paramount.”
Shari Redstone Tells Paramount Employees Skydance ‘Has a Clear Strategic Vision for the Future’; Co-CEOs Say in Memo ‘It’s Business as Usual’ for Now
Source Agencies
