Bidding War Erupts on Paramount as Edgar Bronfman Submits $4.3B Competing Bid

The drama surrounding Paramount Global is entering a new act as media mogul Edgar Bronfman Jr. filed a $4.3 billion bid that could put the company’s proposed merger with David Ellison’s Skydance Media on ice.

Bronfman made his bid to take control of the conglomerate — home to CBS, MTV, Comedy Central and Hollywood studio Paramount — by buying the Redstone family’s company, National Amusements, the sources said.

The offer comes a month after Shari Redstone and Paramount board members approved an offer from Ellison’s production giant Skydance to buy Paramount in a complex transaction valued at $8.4 billion.

Wall Street shrugged Tuesday, with Paramount shares falling 1.2% to $10.94, after the offer had been widely expected amid reports weeks ago that Bronfman was likely to enter the fray.

Bronfman is leading an investor group that includes longtime media executives Jon Miller, Steven Paul and John Martin.

“We believe there is significant growth in Paramount’s business and in the value of Paramount stock,” Bronfman said in a letter to Paramount’s lead independent director Charles Phillips, The Wall Street Journal first reported.

Bronfman’s offer comes just two days before Paramount’s window to accept alternative offers to Skydance’s proposal closes. Paramount’s special board committee, led by Phillips, must now review the two bids for the embattled media company.

The Skydance deal allowed for a 45-day window during which Paramount would be able to entertain competing offers.

A representative for Paramount declined to comment on the offer.

As part of the offer, Bronfman has proposed buying National Amusements in an equity deal worth $1.75 billion, equal to what Skydance offered for Redstone’s company, plus investing $1.5 billion in Paramount’s balance sheet, also similar to what Skydance has offered, sources said. Newspaper. Including debt, Bronfman’s offer for Paramount’s holding company is $2.4 billion.

The figure would also cover a $400 million breakup fee if Paramount leads with a bid other than Skydance’s.

But some shareholders are concerned that Ellison’s proposal gives an inflated value to Skydance, which has co-produced some of Paramount’s biggest films, including “Top Gun: Maverick.” The subsequent merger of Skydance’s stake in Paramount values ​​Ellison’s firm at $4.75 billion.

Bronfman is looking to capitalize on the controversy over this part of the deal.

“Our proposal eliminates the risks, uncertainties and costs of combining Paramount with Skydance,” Bronfman wrote. “We believe Paramount is most valuable as an independent business.”

Bronfman’s group said it would pay non-Redstone A-Class shareholders $24.53 per share – more than is stipulated in the Skydance deal. Non-voting Class B shareholders can cash in at $16 per share.

Loop Capital analyst Alan Gould said Tuesday that the difference between the two deals is in the fine print.

Bronfman’s offer would not require Paramount to buy SkyDance at a premium, a move that Loop Capital suggests is “costly.” But it also does not offer public shareholders the opportunity to tender approximately half of their shares at a price above the current market value.

Gould, who maintained his “sell” rating, explained that the Bronfman deal — while it avoids the expensive acquisition of Skydance — lacks the immediate financial benefit that Ellison’s offer includes.

LightShed analyst Rich Greenfield said Ellison’s deal is hard to beat, adding that all that really matters is Redstone’s vote. And in the end, for the media heiress whose father, the late Sumner Redstone, built the company, it may come down to preserving the legacy.

“At the end of the day, I think the question is, if you’re the Redstone family, who do you want to leave this asset to?” Greenfield said Tuesday on his firm’s podcast. “And my gut instinct is the $180 billion Ellison family, one of the richest families in the world.

He added that Redstone is aware of “the complete storm that the whole media is getting into.” That includes the rapid decline in cable subscribers and advertising for linear TV, he said.

“If you had to choose, who would you want to own this asset and have the best chance of protecting and investing in it?” Greenfield said. “It’s hard to argue that Ellison isn’t the best buyer.”

Bronfman, who previously ran Warner Music and liquor giant Seagram, said in a separate letter to Phillips that he has secured financing commitments of about $5 billion from a variety of individuals and companies, including Fortress Investment Group; BC Partners Credit, crypto investor and former child actor Brock Pierce; longtime activist investor Jeff Ubben and his wife, Laura Ubben; and Duty Free Americas chairman Simon Falic.

The letter noted that all 19 listed backers, including Bronfman, are prepared to commit to the financing pending “if applicable, final approval of their respective investment committee or governing body.”

The new offer marks another twist in the months-long trial to sell Paramount, which has been weighed down by its declining cable TV business as more consumers switch to streaming. The company is in the throes of cutting 15% of its US workforce, or 2,000 jobs, in an effort to shed $500 million from its books.

Last week, Paramount shuttered its iconic television studio and told investors on its second-quarter earnings call that it wrote down the value of its cable networks by nearly $6 billion.

While it’s unclear whether Bronfman’s bid for Paramount will be successful, sources say the heiress has long favored Ellison’s bid over potential suitors, believing the 41-year-old son of billionaire Oracle co-founder Larry Ellison has the ambition, tech know-how and financial muscle to take Paramount to the next level.

Ellison, who is getting his father’s backing to build a bigger media empire by merging Skydance with Paramount, is also partnering with RedBird Capital and private equity firm KKR to secure a $1.5 billion infusion to help the media giant to pay its debt.

Their deal sets aside $4.5 billion to buy back shares of Paramount’s Class B shareholders, who are eager to leave.

Redstone’s non-Class A shareholders would receive $23 per share to exit. Investors can keep their shares in the new entity.