Bronfman ups bid for control of Paramount to $6 billion
As a seasoned film enthusiast and industry insider with decades of experience under my belt, I’ve seen my fair share of Hollywood drama unfold before my eyes – but this latest twist in the Paramount Global saga has got to be one for the history books! The cat-and-mouse game between Edgar Bronfman Jr. and David Ellison is reminiscent of a blockbuster movie plot, with each player pulling out all the stops in their quest for control of the iconic studio.
In the final moments before a decision was due, Edgar Bronfman Jr., a former executive at Seagram and Warner Music, stepped up his bid to acquire Paramount Global. His offer for the Redstone family’s investment firm and the iconic studio reached $6 billion, as reported by three sources close to the situation who requested anonymity.
On late Wednesday, an unexpected development unfolded in the turbulent auction process, as the independent board members of Paramount were contemplating whether to allow Bronfman’s bid for the ailing company – which owns CBS, Comedy Central, Nickelodeon, Showtime, and the Paramount Pictures studio – to remain a possibility.
Six weeks following the acceptance of David Ellison’s $8.4-billion, two-step acquisition offer by Paramount for National Amusements Inc., owned by the Redstone family, there has been a flurry of intense activity at Paramount.
Bronfman is navigating through an opportunity opened up by a clause in Ellison’s Skydance Media agreement, which was endorsed by the Paramount board members and primary shareholder Shari Redstone in early July. This clause allows for a 45-day period during which other potential buyers can present “superior” offers, as stated in a regulatory filing.
The Bronfman group’s earlier $4.3 billion offer emerged Monday, on the 43rd day.
As a supporter, I find myself in a position where I need to express my thoughts regarding the current situation. The Special Committee of independent directors at Paramount now holds the responsibility to deliberate on whether they should extend the deadline, moving it to early September. This extension is intended to allow them to delve deeper into the specifics of Bronfman’s offer and thoroughly assess the financial backing of his investor group. Essentially, they must decide whether to redirect their efforts towards a potential transaction with Bronfman, or continue on the path with Skydance.
Individuals familiar with the situation stated that the 69-year-old heir to the Seagram liquor empire is encountering significant challenges in attempting to oust Ellison, a billionaire’s son who has invested a portion of his family’s wealth into Skydance’s pursuit of National Amusements and Paramount.
For several months, Bronfman has been secretly preparing a proposal to acquire NAI and Paramount. However, his bid was unsuccessful earlier this summer, leading Shari Redstone to accept a more attractive offer from Skydance in July for National Amusements and Paramount instead.
Skydance’s bid still appears stronger than Bronfman’s.
Skydance’s bid is nearly $2.5 billion higher than the increased Bronfman bid. Not only does Ellison have a signed agreement and matching rights for any rival bid, he has backing from RedBird Capital Partners and his billionaire father. In addition, the Skydance proposal includes a key provision that helped it win the Paramount board’s support: $4.5 billion set aside to buy shares from Paramount investors, including the non-voting Class B shareholders who want to exit at $15 a share.
In a letter to the Chairman of Paramount’s Special Committee, Charles E. Phillips, Jr., Bronfman expressed their intention to establish a fund for purchasing shares from certain Class B shareholders.
According to the Wall Street Journal, the latest offer provides non-Redstone, non-voting shareholders of Paramount with the chance to cash out their shares at a price of $16.
As a devoted cinephile and shareholder, I’ve noticed that the matter of compensation for Class B stockholders has been a significant point of discussion. The board members at Paramount have made it their priority to showcase their commitment to upholding their fiduciary responsibilities, ensuring they act in the best interests of all shareholders, not just those who hold the voting Class A shares, such as the Redstone family, who control a substantial 77% of the company.
Some investors have shown concern about Ellison’s multi-step agreement, particularly his intention to merge his Santa Monica studio, Skydance, with Paramount. The deal sets the valuation of Skydance at $4.75 billion, a company that jointly owns several of Paramount’s prominent franchises such as “Top Gun: Maverick,” “Transformers,” “Mission: Impossible,” “Reacher,” and “Star Trek.”
In simpler terms, both Skydance and Bronfman’s plans involve purchasing the Redstone family’s National Amusements Inc (NAI) for a total of $2.4 billion. Once all debts are paid off, the Redstone family will be left with approximately $1.75 billion.
Bronfman has been a major figure in Hollywood for decades.
Previously, he held the position as head of Universal Studios, followed by Warner Music. At present, he holds the title of executive chairman for FuboTV. Last week, FuboTV secured a significant court triumph against The Walt Disney Company, Warner Bros. Discovery, and Fox Corporation. A federal judge in New York has temporarily halted the launch of their joint venture – a sports-focused streaming service named Venu – citing potential antitrust issues.
Over the blooming season this year, I found myself wrestling with the task of piecing together a bid, with funding from Bain Capital, as per sources close to the situation but not permitted to speak publicly about it. Unfortunately, Bain eventually opted out, leaving me without a solid offer at a crucial juncture during the bidding process.
Despite briefly losing interest in Skydance’s offer, no other contenders managed to demonstrate that they possessed the necessary financial resources to make a viable bid, leaving me impressed with Skydance’s position.
As a film enthusiast, I was thrilled to join forces with a remarkable team of investors in the world of entertainment. This dynamic group includes Jon Miller, a seasoned executive who has worked for Fox and AOL, Steven Paul, an investor in Atlas Comics, Brock Pierce, a talented actor from “The Mighty Ducks,” and John Martin, the former CFO of Time Warner. Together, we aim to create something extraordinary!
The team is hurriedly assembling a substantial plan, aiming to present it to the Special Committee before this week’s cutoff date.
“Raymond James media analysts, Ric Prentiss and Brent Penter, stated in their recent report that it appears Shari Redstone leans towards the idea of merging with Skydance Media due to Skydance’s current decision to keep the company intact (for now) and given the substantial wealth of the Ellison family.”
70-year-old tycoon shares a friendly bond with Bronfman, as reported by those involved in the situation. They both hail from influential families and often move within the same high-profile media circles in New York. Interestingly, one of her trusted advisors, Miller, is a significant figure in Bronfman’s investment group. In fact, Miller was once a partner at Redstone’s private equity firm, Advancit Capital.
Regardless of whether Bronfman’s offer fails, engaging in this bidding process might work in favor of Paramount when dealing with potential shareholder lawsuits. This is because they could present evidence that the sale process was transparent and welcoming to multiple offers from potential buyers.
Paramount shares closed up 1.4% to $11.09.
Staff writer Samantha Masunaga contributed to this wrereport.
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2024-08-22 02:32