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Billionaire entertainment executive Edgar Bronfman Jr. has quit Forward Bid Gaining control of Paramount Worldwide clears the way for David Ellison’s Skydance Media to take the prize.
Late Monday, Paramount’s lead independent director announced that the auction for the company was closed and that the Skydance acquisition would move forward. If Skydance receives approval from federal regulators, Ellison and his team would take over in about a year.
“After nearly eight months of intensive exploration, Paramount’s viable opportunities have been thoroughly explored, and our Special Committee continues to believe that the transaction we have reached with Skydance will deliver immediate value and has the potential to continue to participate in value creation in a rapidly evolving industry landscape,” Charles E. Phillips Jr., chairman of the Paramount Special Committee, said in a statement.
Less than a week ago, Phillips and other independent directors extended a “go to the store” deadline to review Bronfman’s $6 billion proposal to buy National Amusements Inc., the Redstone family investment firm, while also providing a $1.5 billion cash infusion to help the struggling media company.
“Tonight, our bid team notified the Special Committee that we are withdrawing from the bidding process,” Bronfman said in a statement. “It was an honor to have the opportunity to participate in the bidding process. We continue to believe that Paramount Worldwide is an extraordinary company with an unparalleled collection of renowned brands, assets and talent.”
It was unclear why Bronfman withdrew from the meeting ahead of a Sept. 5 deadline for Paramount’s independent board members to decide which bidder will acquire the troubled media company, which owns CBS, Comedy Central, Nickelodeon, MTV and the historic Melrose Avenue movie studio. The special committee is set to scrutinize Bronfman’s proposal this week.
But there are signs that Bronfman’s offer doesn’t meet Skydance Media’s $8.4 billion proposalThe company’s controlling shareholder, Shari Redstone, and Paramount’s board of directors approved the deal in July.
The bid from Ellison’s SkyDance had several advantages.
Not only are the financial terms higher, but Ellison is also miles ahead of other potential bidders. The tech mogul first approached Redstone last summer to express his interest in buying out the Redstone family and investing in the company her father had run for decades, when it was called Viacom. Paramount board members first began discussing Ellison’s deal in December.
By withdrawing before the special committee formally made its decision, Bronfman may have wanted to spare himself and other investors the embarrassment of being rejected in this high-profile auction.
“On behalf of the Special Committee, I thank Mr. Bronfman and his group of investors for their attention and efforts,” Phillips said.
Paramount executives declined to comment late Monday. But last week, the special committee said Bronfman’s bid would be the only one the board was willing to consider, in addition to Skydance’s. The window for all other bidders closes on Aug. 21.
Bronfman’s decision also removed some friction from Paramount’s process.
Just last week, Skydance expressed displeasure after special committee members extended Bronfman’s procurement deadline.
In a letter to Paramount’s special committee, the company’s lawyers accused it of violating the terms of Skydance’s acquisition of National Amusements and Paramount, according to people familiar with the matter.
“While there may have been disagreements, we believe everyone involved in the sale process is united in their belief that better days are ahead for Paramount,” Bronfman said in a statement. “We congratulate the Skydance team and thank the Special Committee and the Redstone family for their engagement during this process.”
The former Seagram and Warner Music executive had sought to exploit a clause in the Skydance agreement that set a 45-day period for Paramount’s board to solicit a “superior” offer to Skydance.
After weeks of trying to rally a group of investors, Bronfman submitted his proposal to Paramount’s lead independent director, Phillips, on August 19.
Bronfman’s main argument is that his group’s takeover would be more straightforward than a deal backed by Ellison, and therefore better for Paramount shareholders. It mirrors many of the terms of Skydance’s proposal.
Bronfman said he would buy National Amusements for $2.4 billion, as Skydance had proposed. Once the company paid off about $650 million in debt, the Redstones would receive $1.75 billion.
Both offers would inject $1.5 billion into Paramount’s weakened balance sheet, allowing the company to pay down debt after the deals close, a process that would require federal regulators to get involved, a process expected to take about a year.
But Skydance had one important advantage that helped it win the support of Paramount’s board: This spring, Skydance said it would spend $4.5 billion to buy shares from Paramount investors, including nonvoting Class B shares at $15 apiece.
Bronfman scrambled to find the money—proposed $1.7 billion—to offer Class B investors $16 a share.
If Paramount supports Bronfman’s bid, his offer would also cover a $400 million breakup fee that Skydance would have to pay.
Bronfman’s proposal was intended to eliminate a controversial step in Ellison’s deal, which would have combined his Santa Monica-based Skydance Films with Paramount.
Some Paramount shareholders have expressed displeasure at Skydance’s $4.75 billion valuation, saying the entertainment company is not worth that much. Skydance is the co-owner of some of Paramount’s biggest blockbusters, including Mission: Impossible, Top Gun: Maverick and Star Trek. Ellison’s company has also built an animation studio under former Pixar creative chief John Lasseter.
Multiple sources speculated that Paramount’s board was willing to accept Bronfman’s proposal because Redstone wanted to protect her family from costly shareholder lawsuits.
this The sale process has already led to litigationParamount directors’ lobbying may be intended to prove that Skydance is the only viable bidder.
Skydance Media is backed by Ellison’s father, Larry Ellison, and Redbird Capital Partners.
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