As the August 21 deadline looms for other parties to make a run at Paramount (or forever hold their peace), the Wall Street Journal reports that Edgar Bronfman Jr. has not exited the Paramount scene but is in talks with investors and preparing a bid.
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| (L-R) Shari Redstone, Steven Paul, Edgar Bronfman Jr and David Ellison / Getty |
The stock, which frequently jumps about on news like this, is up nearly 8%.
Other potential acquirers like Barry Diller’s IAC have dropped by the wayside given the size and complexity of the business combination, which seemed to leave the path clear for Skydance. David Ellison’s company backed by Oracle co-founder Larry Ellison and Gerry Cardinale’s Redbird Capital, announced the circa $8 billion, multi-step transaction in July but with a so-called “go-shop” period of 45 days for Par to field other offers. The window is set to close next Wednesday at 11:59 pm ET.
The WSJ says that Bronfman, heir to the Seagram family fortune and a former media executive and head of Warner Music, has had talks about joining forces with players like Roku, Fortress Investment Group and Hollywood producer Steven Paul, who earlier in the process had put together a consortium for a bid that didn’t go anywhere.
The difference now is that Paul and others, including Ellison, were initially eyeing an acquisition of only Shari Redstone’s controlling stake in Paramount, which would give them ownership of the company for more like $3 billion without having to buy it all in. That’s not in cards anymore. Any deal that comes in now would have to offer more to CBS shareholders than Skydance has.
Shareholders aren’t all thrilled with the Skydance deal, which calls for Skydance to first acquire Shari Redstone’s stake in Paramount as well as all Class A voting shares and a chunk – but not all – of the Class B common stock. Paramount would then acquire Skydance in an all-stock deal that would dilute current shareholders of the company, which will still be publicly traded.
The WSJ said Bronfman might offer shareholders more ownership. But he also might not end up making a bid at all. New offers go to a special committee of Paramount’s board, which would evaluate how it stacks up against a Skydance deal and make a recommendation to Redstone.
Reps for Paramount’s special committee, National Amusements and Bronfman did not immediately respond to Deadline’s requests for comment.
From Deadline:
Edgar Bronfman Makes His Move With $4.3 Billion Bid For Paramount Global – Update
Deadline hears that Edgar Bronfman, Jr. has made an offer for Paramount Global in a deal worth $4.3 billion, attempting to undo Par’s merger with Skydance.
The offer is said to consist of a $2.4 billion payment to Shari Redstone for her family holding National Amusements, which controls Paramount Global through its majority of Class A voting shares. Some $1.5 billion would be injected into the company’s balance sheet to pay down some debt and ensure investment grade. Most of the rest would go towards a $400 million breakup fee to Skydance, Deadline understands.
The offer would not take out other Paramount shareholders, unlike the Skydance deal, which set $4.5 billion to buy out all Class A and a chunk of B shares at a nice premium. That number was sweetened several times over months of negotiations to make the deal more appealing to stockholders, who had threatened to sue. They had been incensed at a transaction that gave Redstone alone a big payday, as this latest offer seems to.
The Skydance deal also offered $2.4 billion to acquire National Amusements as well $1.5 billion of capital for the balance sheet. However, a second step would see Paramount acquire Skydance in an all-stock deal valued at $4.75 billion, which would dilute shareholders. The company would remain publicly traded in both cases.
The offer comes ahead of Wednesday night deadline that will see Par’s merger with Skydance become official if no “superior” offer has emerged. If a rival deal is considered worthy of following up, the agreement allows 15 days, then another 15 to explore it.
Shari Redstone has the last word on any deal.
PREVIOUSLY: We are hearing that Edgar Bronfman Jr.‘s bid for Paramount Global could come as early as tonight ahead of an 11:59 ET deadline on Aug. 21. That’s when Par’s merger with Skydance will become official if no “superior” offer has emerged.
Skydance and Paramount’s circa $8 billion combination announced in July included a 45-day go-shop period that can be extended twice in 15-day increments, which would kick in if the special committee of Par’s board of directors has another offer credible enough to explore further. It now appears on the cusp of a new entrant in former Seagram scion and entertainment executive at Vivendi Universal and Warner Music, who could declare as early as tonight, although it might slide into tomorrow.
The terms are not known, but Deadline hears that Bronfman’s bid no longer includes Roku among its backers. Fortress Investment Group is. If Paramount ultimately jilts Skydance, any new buyer would be on the hook for a $400 million breakup fee.
The Skydance transaction would see the David Ellison company acquire Shari Redstone’s controlling stake in Paramount as well as all Class A and some Class B shares, then have Paramount buy Skydance in an all-stock deal with the company remaining public.
Some sources tell Deadline, but we haven’t confirmed, that Paramount director Charles Phillips is a proponent of the Bronfman bid and has been helpful in seeking financiers to assist it. Phillips, who leads the board’s special committee in assessing bids, was reportedly instrumental in the previous Skydance offer going sour with Paramount Global in June before the two sides came together again. Phillips voted for the latest iteration of the Skydance deal.
David Ellison’s company is backed by Oracle co-founder Larry Ellison and Gerry Cardinale’s RedBird Capital. Skydance would also get a look at any new offer to be taken up by the Par board’s special committee, which unanimously approved the Skydance merger on July 7. It also said then that “the company 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.” So it’s not clear if or what Paramount might officially disclose this week.
Reps for all parties involved either declined to comment or to respond to queries.
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From Deadline:
Edgar Bronfman Backers, More Details Emerge In Bid For Paramount That Seeks To Unseat Skydance
Investors backing Edgar Bronfman’s bid for Paramount Global include producer Steven Paul and John Paul Dejoria, who months ago had been working on their own offer, as well as child actor Brock Pierce and Nurali Aliyev, a Kazakh businessman and grandson of the former president of Kazakhstan. UK investment firm BC Partners and Fortress Investment Group are other names in the mix, Deadline has learned.
Pierce, who starred in The Mighty Ducks, is a big cryptocurrency player and founder of Tether whose legal woes have made headlines recently amid a barrage of lawsuits involving a former crypto lender and a failed hotel project in Puerto Rico.
Bronfman stepped in last night with an offer worth $4.3 billion, looking to disrupt a merger agreement between Skydance and Paramount announced July 7 that was set to be sealed at 11:59 p.m. ET on August 21 if no “superior” proposal arrived before then.
Bronfman’s letter to Charles Phillips, head of Paramount’s special board committee evaluating offers, asks to extend a so-called “go-shop period,” Deadline hears, which the committee can do for 15 days if a rival offer looks viable. It said the group still needs a few more days to present Paramount with signed financing commitments and a binding offer letter, Deadline has learned from someone with knowledge of the letter.
Bronfman is offering Shari Redstone $2.4 billion for her family holding National Amusements, which controls Paramount Global through its lock on Class A voting shares — the same sum agreed to by David Ellison‘s Skydance. About $1.5 billion would flow to the company’s balance sheet to pay down debt — ditto for Ellison. The rest would go towards a $400 million breakup fee to Skydance.
Bronfman offers no cash-out for Paramount’s army of Class B nonvoting shareholders. Ellison had set $4.5 billion to buy out some Class A and B shares for $23 and $15, respectively.
Paramount Global shares fell today in a down market after news of the bid but are off their lows.
Bronfman, the chair of Fubo, scion of the Seagram drinks empire and former head of Universal and Warner Music, is said to be pitching his offer as cleaner and less dilutive than Skydance’s, since it doesn’t include a merger. A Skydance second step after gaining control of Paramount calls for Par to buy it in a dilutive all-stock merger worth $4.5 billion.
Regulators will need to look at that, but no major impediments are anticipated.
Members of Bronfman’s investor group said it would be prepared to commit about $5 billion in total capital, according to a person with knowledge of the letter.
“I think the board has to take a look at it. You don’t have the dilution. On the other hand you also don’t have half of the B stock being taken out,” says one Wall Streeter.
Paramount and Skydance, backed by Oracle co-founder Larry Ellison and RedBird Capital, started talking late last year and after some false starts and a messy process completed a deal last month. The back and forth was said to be related in part to Skydance coughing up some cash for shareholders besides Redstone.
Phillips, a former Wall Street banker, served as president of Oracle from 2003-2010.
NAI and Paramount have been directing queries to reps for Paramount’s special committee, which did not return requests for comment.
The Bronfman offer “should be indifferent to Redstone on a pure financial basis,” wrote Loop Capital analyst Alan Gould in a note today.
“It is cleaner and simpler in that it does not require PARA to pay up to buy an asset from the acquirer. However, it does not give the public the same opportunity to sell half their shares at an above market price,” he said. “Also, the [Paramount] Board will have to decide which asset mix it prefers, with the Skydance offer slightly more weighted to content creation, and which team it believes will be able to better run the ongoing company.”
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Originally published: August 17, 2024.
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