Initially making an offer of $4.3 billion, Bronfman then increased it to $6 billion for National Amusements, the majority stakeholder of Paramount Pictures, owned by Shari Redstone.
On Wednesday, Paramount’s special committee said that it will consider a rival bid from Edgar Bronfman Jr. and decide to extend the agreed-upon “go shop” phase of its merger deal with Skydance by 15 days.
According to a person familiar with the deal, Bronfman made an initial late-Monday offer of $4.3 billion for National Amusements, controlled by Shari Redstone, the owner of Paramount. Bronfman would purchase a minority interest in Paramount as part of the offer. The individual, who wished to remain anonymous in order to discuss the details of the offer, said that Bronfman obtained more money to back a greater proposal after putting the initial bid.
According to the source, Bronfman increased his offer and put in a new one on Wednesday for $6 billion.
The deal appears to surpass Paramount and Skydance Media’s merger agreement, which was finalized in early July after months of negotiations.
A 45-day “go shop” time was stipulated in the deal, during which Paramount was free to request bids. A Bronfman spokesman declined to provide a statement.
“The receipt of an acquisition proposal from Edgar Bronfman, Jr., on behalf of a consortium of investors” was verified by the special committee on Wednesday.
The committee released a statement saying, “As a result, the Bronfman Consortium’s ‘go shop’ period is extended until September 5, 2024, pursuant to the transaction agreement to which the Company remains subject.” “There is no guarantee that a superior proposal will emerge from this process. The Company does not plan to release any more information unless it feels that it is necessary or acceptable to do so.
In order to determine prospective purchase interest, the committee said that it had gotten in touch with over 50 third parties during the first “go shop” session. According to the committee, the go-shop time will still end before Wednesday at midnight for all other parties.
The group that purchased Skydance, which also includes the private equity companies KKR and RedBird Capital Partners, decided to buy National Amusements and spend over $8 billion in Paramount. National Amusements now has an enterprise value of $2.4 billion from the acquisition, including $1.75 billion in stock.
Class A shareholders of Paramount would get $23 in cash or stock each, while class B shareholders would receive $15 a share as part of the Skydance deal. This means that a total of $4.5 billion in cash consideration would be made available to public shareholders. In addition, Skydance committed to bringing $1.5 billion into Paramount’s financial picture.
77% of Paramount’s class A shares and 5% of its class B shares are owned by National Amusements. In the event that the Skydance transaction closes, it will possess 69% of the outstanding class B shares and all class A Paramount shares.
In his original proposal, Bronfman suggested paying $1.75 billion in stock to acquire National Amusements. According to the source with knowledge of the matter, that offer included paying the $400 million breakup fee that Paramount would owe Skydance if it pulled out of the contract, in addition to investing $1.5 billion into Paramount’s balance sheet, similar to the Skydance arrangement.
According to the source, the enhanced offer submitted on Wednesday now comprises $1.7 billion for a tender offer that would allow non-Redstone, non-voting Paramount shareholders to choose to earn $16 per share.
In addition to overseeing Seagram, a liquor firm, and Warner Music, Bronfman has been the executive chairman of Fubo TV since 2020. The Wall Street Journal was the first to report on the details of his proposal.
Shareholders have expressed concern about the terms of the Paramount and Skydance merger deal. In what might be the first move toward a lawsuit contesting the Skydance sale, money manager Mario Gabelli allegedly filed a complaint demanding that Paramount turn over its books pertaining to the transaction. According to reports, shareholder Scott Baker filed a lawsuit to halt the acquisition, claiming it will cost the company $1.65 billion.
