Will the dust ever settle at Paramount? Just as the Skydance and RedBird Capital-backed bid seemed to be guaranteed, another contender has emerged. In line with a 15-day extension clause in their merger contract, the Paramount Global Group has now extended their go-shop period solely to entertain an (escalating) bid offer from Edgar Bronfman Jr. Our expert entertainment lawyers in Los Angeles, Brandon Blake of Blake & Wang P.A., weighs in on this further drama from the beleaguered Paramount stable.
Last Minute Bidding War
The official go-shop period for the Paramount bid was set to expire last week. It has now been extended through September 5, but solely for the Bronfman offer. No further bids or approaches will be taken otherwise. The heir to the Seagram liquor fortune has expressed interest in the Paramount Group before, and the revised $6B bid is hard to ignore. Still, the news of further complications in what has been one of the rockiest M&A actions of recent times may not be particularly well thought of.
Paramount continues to face severe Wall Street pummeling and a stringent set of restructuring moves aimed at restoring it to independent viability from the 3-person CEO team currently in charge, including the shuttering of the Paramount TV studio arm and some significant looming layoffs.
Is Skydance Off? Not Yet!
Despite these attempts to drum up more interest in the Hollywood legacy studio, this does not mean that the Skydance bid has been shelved altogether. Bronfman’s initial bid was a $4.3B one, including $1.7B in cash aimed the way of some Paramount shareholders and the $400M kill fee that will be paid to Skydance should Paramount opt for a different bid. This was subsequently upped to a juicy $6B. Bronfman heads a consortium of around 20 investors, a lineup that has somewhat changed from the initial one.
While the news is business as usual for Hollywood mergers, the late timing and sudden emergence are bound to be another frustration for Skydance itself. The current Skydance merger bid stands around the $8B mark, but the two proposals are vastly different in structure.
Either way, Shari Redstone will walk away with a cool $2.4B for the controlling stake in the Paramount Group, through its special Class A voting shares. The new potential deal also echoes the $1.5B promised to help Paramount steady its finances and reduce some of its debt load. However, Skydance intended to add a further $4.5B to buy out the remaining Class A holders outside the Redstone family and a roughly 50% stake in the Class B shares. As the $23 (Class A) and $15 (Class B) offer outstrips Paramount’s current share price, stockholders favored it.
The Bronfman deal proposes to buy out Class A stockholders at $24 per share and a smaller number of Class B shares at $16. Apparently, he “prefers” that the additional $1.7B added to the offer also be used to pay out shareholders. This has not been directly stipulated and would remain at Paramount’s discretion.
For now, it seems the CEO team is forging ahead with restructuring plans aimed at stabilizing Paramount as a standalone entity. Where this latest bidding war will end, however, is a mystery.
The Bronfman deal proposes to buy out Class A stockholders at $24 per share, and a smaller amount of Class B shares at $16. Apparently, he “prefers” that the additional $1.7B added to the offer also be used to pay out shareholders, this has not been directly stipulated and would remain at Paramount’s discretion.
For now, it seems the CEO team are forging ahead with restructuring plans aimed at stabilizing Paramount as a standalone entity. Where this latest bidding war will end, however, we can only guess.
