The future of Paramount Global hangs in the balance as a competing offer from Edgar Bronfman Jr. threatens to supersede the current merger agreement with Skydance. Initially offering $4.3 billion for Shari Redstone’s National Amusements, Bronfman has now upped the bid to $6 billion in an attempt to acquire a minority stake in Paramount. This move has extended the “go shop” period to allow the special committee to review the offer from the Bronfman Consortium.
The special committee has confirmed the receipt of the acquisition proposal from Edgar Bronfman Jr., triggering an extension of the “go shop” period until September 5, 2024. This decision comes after contacting over 50 third parties during the initial period to explore potential acquisition interest. However, there is no guarantee that this process will result in a Superior Proposal, and further developments will only be disclosed as deemed appropriate or required.
The initial merger agreement between Paramount and Skydance involved a substantial investment of more than $8 billion into Paramount by a consortium that included RedBird Capital Partners and KKR. This deal would give National Amusements an enterprise value of $2.4 billion, with Skydance agreeing to inject $1.5 billion of capital into Paramount’s balance sheet. Class A and Class B shareholders of Paramount would also receive cash or stock considerations as part of this agreement.
Bronfman’s bid, which includes a tender offer of $16 a share for non-Redstone, nonvoting Paramount shareholders, poses a challenge to the Skydance deal. With past experience running Warner Music and Seagram, as well as currently serving as executive chairman of Fubo TV, Bronfman brings a wealth of knowledge and expertise to the table. The bidding war between the Bronfman Consortium and Skydance adds a layer of complexity to the future of Paramount Global.
The merger agreement with Skydance has faced opposition from shareholders, with money manager Mario Gabelli and investor Scott Baker taking legal action against Paramount. Gabelli sought access to the company’s books related to the Skydance deal, potentially paving the way for a lawsuit challenging the agreement. Meanwhile, Baker sued to block the deal, arguing that it would cost shareholders $1.65 billion.
The uncertain future of Paramount Global is marked by competing offers, shareholder backlash, and legal challenges. The decision of the special committee to extend the “go shop” period indicates a thorough review of the bids on the table. As the bidding war intensifies, the fate of Paramount hangs in the balance, with the potential for significant changes in ownership and strategic direction.