Bronfman Ups Bid for Paramount to $6 Billion as Company Extends ‘Go-Shop’ Period
Bronfman has injected more cash into his bid to buy out some Paramount stockholders.
Has anyone checked in on David Ellison in recent days? The billionaire likely isn’t feeling too great right now, as his bid to acquire Paramount Global and merge it with his TV and movie studio Skydance Media has some stiff, late-arriving competition. Just hours before the 45-day “go-shop” window agreed to in Ellison’s deal with Paramount, heir to the Seagram liquor fortune and former Warner Music executive Edgar Bronfman Jr. swooped in with a bid of his own. Bronfman has improved his offer in recent days, and now the Paramount committee established to consider merger and acquisition opportunities has extended the go-shop period to allow it time to appropriately consider Bronfman’s proposal.
Key Details:
- Bronfman has upped his offer to $6 billion, after pledging an additional $1.7 billion to buy out some Paramount shareholders.
- The go-shop window now extends until Sept. 5, but no other outside offers will be considered.
- Ellison has the right to improve his deal terms in response to Bronfman.
The Paramount Global committee now has until Sept. 5 to decide between Ellison’s offer and Bronfman’s. The go-shop window expired for other potential bidders at 11:59 p.m. ET on Aug. 21, meaning only Bronfman and Ellison’s deals will be considered by the board going forward.
“There can be no assurance this process will result in a Superior Proposal. The Company does not intend to disclose further developments unless and until it determines such disclosure is appropriate or is otherwise required,” the committee said.
Bronfman revised his deal terms on Wednesday, hours before the deadline. The original offer was worth $4.3 billion, a far cry from the $8 billion Ellison has put together in his offer. Bronfman infused another $1.7 billion into his offer to help buy out some Paramount shareholders, and has also pledged to pay the $400 million break-up fee that would be required by Skydance if Paramount decides to go with the Bronfman deal.
What’s the Difference Between Bronfman, Ellison Offers?
There are some similarities between the two deals on the table. Both would pay Paramount controlling shareholder Shari Redstone around $2.4 billion for National Amusements Inc., the holding company which contains 77% of Paramount’s Class A voting stock. Both deals would also infuse $1.5 billion into Paramount’s balance sheet to help it pay down debt.
Ellison also plans to inject another $4.5 billion into the deal to buy out additional Class A shareholders and some Class B investors as well. As mentioned above, Bronfman now plans to put $1.7 billion into the deal for a similar purpose, though he’s leaving specifics about how that money will ultimately be spent up to Paramount.
The biggest difference in the two deal offers is that Ellison plans to have Paramount buy Skydance once he has control of both firms, so the two companies can merge into one. Shareholders aren’t enamored with the $4.75 billion valuation Ellison and Paramount have agreed to for Skydance, saying it will dilute their holdings. One Class-B shareholder has already sued on the grounds that the Skydance deal unfairly enriches Redstone at the expense of nonvoting investors.
If the Paramount committee decides at the end of the extended go-shop period to pivot to Bronfman’s offer, Ellison and Skydance will have the right to present a counteroffer. In short, even Sept. 5 might not bring the end of the Paramount merger saga.
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