The Paramount Global ball is back in Skydance‘s court as Edgar Bronfman has discontinued his short-lived $6 billion bid to take control of the Shari Redstone-run media giant.
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| Edgar Bronfman Jr., Paramount Studios / Getty Images |
“Tonight, our bidding group informed the special committee that we will be exiting the go-shop process. It was a privilege to have the opportunity to participate,” Bronfman said in a statement provided to Deadline on Monday (Aug. 26) evening.
“We continue to believe that Paramount Global is an extraordinary company, with an unrivaled collection of marquee brands, assets and people,” the former Vivendi vice-chair added. “While there may have been differences, we believe that everyone involved in the sale process is united in the belief that Paramount’s best days are ahead. We congratulate the Skydance team and thank the special committee and the Redstone family for their engagement during the go-shop process.”
This latest twist in the fate of the studio that made The Godfather comes just days after Bronfman, the Seagram heir and Fubo TV executive chairman, upped his initial offer by $1.7 billion to a $6 billion investment. Skydance had put forth a $8.4 billion offer with a full merger of the two companies, bringing animation, film and TV production and other assets under the newly combined entity. The Bronfman-led bid, by contrast, would have resulted in control of voting shares and a stake in the overall company.
Earlier this month, Bronfman assembled about 20 investors, from funds to high-net-worth individuals and financiers for a $4.3 billion package. Even with former child actor-turned-crypto magnate Brock Pierce and Kazakh businessman Nurali Aliyev, who were in the initial consortium, leaving the original group, the offer seemed to have legs – – certainly enough to put the National Amusements-dominated conglomerate in serious play again.
Despite Paramount Global stock veering toward near-record lows, there was serious cash on the table for a deal of some type, from all the players. In either a complicated merger (Skydance) or an out-and-out purchase (Bronfman), the only question that really mattered was who would deliver the biggest bang for the buck.
Like other traditional media companies, Paramount has been managing through a period of significant decline of its linear TV assets. It took a nearly $6 billion write down of the value of its cable network assets earlier this month. At the same time, it has pursued a direct-to-consumer streaming strategy, positioning Paramount+ as a global competitor. But the cost of streaming, along with the task of maintaining a movie studio business in an uncertain theatrical climate, has prompted a need to streamline. Earlier this month, the company announced the layoffs of 15% of U.S.-based workers.
Last week, as the Bronfman bid gathered steam, there was some not very subtle indication from Skydance that it would consider pulling its own offer, the latest of three formal overtures over an eight-month period. In an August 22 correspondence, Skydance lawyers made it clear to Paramount’s board of directors and the committee formed to handle the M&A process that the Ellisons believed Paramount had actually breached the terms of the merger agreement the two companies announced last month.
Maybe that help put the brakes on the Bronfman offer. Perhaps it made it clear that meeting the Skydance bid was going to prove a bridge too far for the new bidder(s) as the Seagram heir lost partners and hence serious cash.
In both bids, Skydance and Bronfman would have paid Redstone $2.4 billion for her controlling stake in Paramount through special Class A voting shares. Both parties also plan to inject $1.5 billion to help Par shore up its finances and pay down debt. If Bronfman had succeed in snagging Paramount, he would have also owed Skydance a $400 million breakup fee.
Charles Phillips, the chief of Paramount’s special board committee in charge of evaluating offers, has been rumored to have encouraged Bronfman’s bid.
Bronfman’s eleventh-hour offer marked another pothole for Skydance. After on-again, off-again talks over the past several months, the deep-pocked, David Ellison-founded company reached a merger agreement with Paramount on July 7 that would have involved a total investment of $8 billion. With Ellison as chairman and CEO and former NBCUniversal chief Jeff Shell as president, the Skydance-Paramount merger, which still faces potential regulatory headwinds but values the total enterprise at $28 billion, included a 15-day extension to explore a rival bid. That “go-shop” period was extended for another 15 days. Technically, the go-shop runs through September 5, but the additional days were added only for Bronfman, meaning the race that began in late 2023 has ended with Skydance poised to take the checkered flag.
Reps from Skydance and the Paramount board’s special committee did not respond to Deadline’s request for comment. Paramount has referred questions to other stakeholders since the messy merger process began.
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Originally published: August 28, 2024.
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