The future of Paramount Global is up in the air as the special committee of Paramount recently announced that they would be extending the “go shop” period by 15 days due to a competing bid from Edgar Bronfman Jr. Initially, Bronfman offered $4.3 billion for Shari Redstone’s National Amusements, the controlling shareholder of Paramount. However, shortly after making this bid, Bronfman raised more funds to support a higher offer and submitted a revised bid of $6 billion. This bid aims to overshadow Paramount’s merger agreement with Skydance Media, which was initially valued at over $8 billion.
The merger agreement between Paramount and Skydance has faced challenges from shareholders. Money manager Mario Gabelli has reportedly filed a lawsuit demanding Paramount to share its books related to the Skydance deal, which could potentially be the first step toward a lawsuit aiming to challenge the agreement. Additionally, investor Scott Baker has also taken legal action to try to block the deal, claiming that it could result in a loss of $1.65 billion for shareholders.
The go-shop period, which allows Paramount to solicit other offers, will be extended exclusively for the Bronfman Consortium until September 5, 2024, as per the revised agreement. Despite over 50 third-party contacts during the initial period, the committee acknowledges that there is uncertainty regarding whether this process will result in a Superior Proposal. The committee stated that it does not plan to disclose further information unless it deems it necessary.
Bronfman’s original offer proposed acquiring National Amusements in an equity deal valued at $1.75 billion, including a significant investment into Paramount’s balance sheet. The updated bid now includes $1.7 billion for a tender offer that allows non-Redstone, nonvoting Paramount shareholders to receive $16 per share. Bronfman’s background includes leadership positions at Warner Music and Seagram, as well as serving as the executive chairman of Fubo TV since 2020.
If the Skydance transaction were to proceed, National Amusements would end up wholly owning class A Paramount shares and possessing 69% of the outstanding class B shares. This deal would give National Amusements an enterprise value of $2.4 billion, with $1.75 billion in equity. On the other hand, Bronfman’s bid seeks to offer $23 per share in cash or stock to Paramount’s class A shareholders and $15 per share to class B shareholders, totaling $4.5 billion for public shareholders. Additionally, Skydance has agreed to inject $1.5 billion of capital into Paramount’s balance sheet.
Paramount Global’s future remains uncertain as the special committee continues to evaluate competing offers. The growing interest from investors like Edgar Bronfman Jr. has added complexity to the situation, prompting legal challenges and uncertainties surrounding the potential acquisition deals. The coming days will be critical for Paramount as they navigate through these bids and determine the best path forward for the company and its shareholders.