Paramount Global‘s board has extended the go-shop window under its Skydance Media deal for 15 days as it engages with an investor group led by Edgar Bronfman Jr., which on Wednesday proffered $6 billion to take control of the media conglomerate — up from $4.3 billion previously.
Bronfman and his backers on Wednesday made the higher bid to acquire National Amusements Inc., Paramount’s controlling shareholder, and added a deal sweetener — offering a pool of $1.7 billion to give Paramount nonvoting shareholders a $16/share buyout premium for a portion of their stock, sources confirmed to Variety. The Bronfman-led group originally offered $4.3 billion and had not offered to acquire any of Paramount Global’s nonvoting stock. The move puts on hold, for now, the deal with David Ellison’s Skydance Media that would see Skydance merge with Paramount.
In an announcement Wednesday, the Paramount board’s special committee confirmed the “receipt of an acquisition proposal from Edgar Bronfman, Jr.,” on behalf of a consortium of investors, and said the “go-shop” period is extended for the Bronfman consortium until Sept. 5, 2024.
“There can be no assurance this process will result in a Superior Proposal,” the special committee said. “The Company does not intend to disclose further developments unless and until it determines such disclosure is appropriate or is otherwise required.”
Bronfman’s raised bid for NAI and Paramount was first reported by the Wall Street Journal. Reps for Bronfman and NAI declined to comment.
The Bronfman-led bid, first submitted Monday to Paramount’s board, came in just two days before the Aug. 21 midnight ET deadline for the go-shop period allowed under the company’s agreement with Skydance that lets Paramount consider superior takeover proposals. With Bronfman’s hat officially in the ring, the board’s special committee has extended the go-shop period for another 15 days, until Sept. 5, 2024.
Since clinching the deal with Skydance (and its financial backer RedBird Capital Partners) on July 7, representatives of Paramount board’s special committee on M&A contacted more than 50 third parties “to determine whether they had an interest in making a proposal to acquire Paramount.” With respect to parties other than the Bronfman consortium, the go-shop period will expire at 11:59 p.m. Eastern Wednesday (Aug. 21), the committee said.
What happens next? The Paramount board’s committee, after a review, may determine Bronfman’s $6 billion proposal is a no-go and that Paramount will proceed with the original Skydance deal. Alternatively, the Paramount board committee could deem the Bronfman bid a better offer, whereupon Skydance-RedBird would have the opportunity to sweeten its original terms. In any case, Shari Redstone will have the final say-so over which path to pick.
It’s unknown what Bronfman and his partners would do with Paramount Global if they were to complete an acquisition of NAI. They may break up the company in some way by selling off its divisions, which include CBS, Paramount Pictures, Showtime/MTV Entertainment Studios and Paramount Media Networks.
Bronfman, in an Aug. 19 letter to Charles Phillips — the Paramount board member and former Oracle exec who heads the special committee on M&A — said his proposal “eliminates the risks, uncertainties and costs of combining Paramount with Skydance,” and that Paramount’s business is “far more valuable” than the Skydance’s bid values it at. Skydance says the Paramount deal has an enterprise value of $28 billion, with Skydance itself valued at $4.75 billion.
Bronfman, formerly CEO of Warner Music Group and Seagram, reportedly secured $5.5 billion in capital commitments from nearly 20 backers. Those include Fortress Investment Group, film producer Steven Paul, ex-Turner CEO John Martin, crypto investor and ex-child actor Brock Pierce — and media veteran Jon Miller, a partner at Shari Redstone’s Advancit Capital investment firm, according to the Wall Street Journal.
Bronfman’s original $4.3 billion offer comprised $2.4 billion for NAI (about $1.75 billion net of debt); an investment of $1.5 billion earmarked for Paramount’s balance sheet to pay down debt; and $400 million for the breakup fee Paramount would be forced to pay to the Skydance group if Paramount opts for Bronfman’s offer.
The Skydance-RedBird offer is worth more than $8 billion. That includes $2.4 billion to acquire NAI’s shares, which represent 77% of the voting power in the company, and $1.5 billion to help pay down debt. In addition, under the proposal, common shareholders would be able to cash out a portion of their shares for $15/share.
The Paramount board special committee said Centerview Partners is serving as financial adviser and Cravath, Swaine & Moore is serving as legal counsel.
Source Agencies
