In the latest twist in the Paramount Global M&A saga, Skydance Media is alleging the media company breached the terms of their merger agreement by engaging with a rival $6 billion bid from investors led by billionaire Edgar Bronfman Jr.
Lawyers for David Ellison’s Skydance sent a letter Thursday to the special committee established by Paramount to evaluate M&A offers, accusing the committee of breaking the terms of their deal by extending the negotiating window to consider Bronfman’s proffer — and threatening to withdraw its own $8 billion-plus proposal, the Wall Street Journal reported.
Skydance’s legal team demanded that Paramount end its negotiations with the Bronfman group. The Bronfman-led offer “is significantly less favorable to the Paramount stockholders from a financial point of view,” Skydance’s letter to the Paramount special committee said, according to the report. The Skydance proposal offers a payout of about $4.5 billion to Paramount’s nonvoting (Class B) shareholders, versus $1.7 billion under Bronfman’s sweetened offer.
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“Paramount has committed an incurable, material breach of the Transaction Agreement,” the Skydance letter said, per the Journal. “While Skydance is not currently exercising its right to terminate the Transaction Agreement, we reserve the right to do so in the future.”
Reached by Variety, reps for Skydance, Bronfman and the Paramount board’s special committee declined to comment.
On Wednesday, the Bronfman-led investor group submitted a $6 billion bid — hiked from its initial $4.3 billion offer — to acquire Shari Redstone’s National Amusements Inc. and also buy a minority share of Paramount Global’s stock from nonvoting shareholders. In response, the Paramount board’s special committee extended the go-shop period for considering bids that credibly rival Skydance’s offer by 15 days, until Sept. 5.
On July 7, after months of on-again-off-again talks, Skydance and financial partner RedBird Capital Partners together with NAI and Paramount Global announced a binding agreement that would see Skydance buy the shares of NAI (which owns 77% of the voting power in Paramount Global) and then merge with Paramount. Under the terms of the deal, Paramount would be required to pay a $400 million breakup fee to Skydance-RedBird if the media company opts to proceed with a “superior” offer; the Bronfman consortium’s bid includes $400 million to pay for that.
Per the agreement reached by Skydance-RedBird, NAI and Paramount, the special committee of Paramount’s board of directors had a 45-day go-shop period (through Aug. 21) during which it was permitted to “actively solicit and evaluate alternative acquisition proposals.” If Paramount engaged in talks with a prospective bidder that the board’s special committee determined “in good faith is or would reasonably be expected to lead to a Superior Proposal,” the company had the right to extend the go-shop period until Sept. 5, 2024.
(Pictured above: Skydance Media CEO David Ellison)
