Paramount finds itself in the midst of a competitive bidding scenario after Edgar Bronfman proposes an offer.
Fresh turn in Paramount Pictures, CBS broadcast network, and MTV's sale process sees a rival proposal, potentially disrupting the planned acquisition by tech tycoon David Ellison and his company, Skydance Media. This competing offer from Bronfman holds a potential threat to the earlier deal.
According to sources, Bronfman's proposal includes $2.4 billion in debt and equity for National Amusements. Besides, he intends to contribute $1.5 billion to Paramount's balance sheet, which can be used to pay down existing debts, as mentioned by one of the sources. The bid further includes an additional $400 million to cover the breakup fee, should a rival deal be terminated.
A few weeks back, Skydance and its partners sealed a deal to acquire Paramount, with the aim of buying out the Redstone family's controlling stake and merging into a larger publicly traded entity. This agreement included a 45-day 'go-shop period,' allowing Paramount to seek and evaluate other offers. This period ends on August 21, but it can be extended, should Paramount choose to deliberate with another suitor. In such a scenario, Skydance would be entitled to a $400 million breakup fee.
Bronfman claims that his offer is superior as it does not involve Paramount acquiring Skydance, as explained by a different source familiar with his reasoning. Before striking the deal with Skydance, Paramount agreed to absorb Skydance in an all-stock transaction worth $4.75 billion, according to the companies.
Paramount's board special committee is scheduled to convene on Wednesday to assess whether Bronfman's proposal has a reasonable likelihood of success, revealed the second source. The committee might consider extending the ‘go-shop deadline’ until September 5, to thoroughly examine the competing offer.
Initial news about Bronfman's bid was reported by The Wall Street Journal.
A spokesperson for Paramount's board opted to remain silent on the matter, whereas Bronfman chose to ignore Reuters' requests for comments.
Bronfman has a history in the media industry.
Back in 1995, he attempted to diversify the family's Seagram liquor business with the acquisition of MCA, home to Universal Music Group, Universal Studios, and two theme parks. However, the company was eventually acquired by Vivendi in 2000, whose CEO, Jean-Marie Messier, was ousted two years after embarking on an extravagant spending spree that weakened the company's financial resources.
Bronfman made his return to the entertainment industry in 2003, with the acquisition of Warner Music Group. Eventually, the music company was sold to Access Industries, a firm controlled by billionaire Len Blavatnik, in 2011.
Later in 2017, Bronfman attempted an unsuccessful bid to acquire Time Inc., at a time when the company was publishing magazines such as Time, Sports Illustrated, and People. According to two sources, Bronfman had considered buying National Amusements prior to the Paramount-Skydance agreement, but had not submitted an offer. It was unclear at the time whether Bronfman had any partners for the bid. UBS and Perella Weinberg Partners reportedly advised him on the deal.
The current sale process of Paramount Pictures, CBS broadcast network, and MTV could be disrupted by Bronfman's rival proposal, potentially challenging Skydance Media's planned acquisition. Furthermore, if Paramount's board finds Bronfman's proposal to have a reasonable likelihood of success, it may extend the 'go-shop deadline' for thorough examination.
