Paramount is taking more time before an official handshake with Skydance, using an extra 15 days allotted in their merger contract to explore another bid – a surprise, last-minute offer from Edgar Bronfman Jr., one that the heir to the Seagram liquor fortune has just sweetened.The special committee of Paramount’s board, which has been overseeing the sale process, acknowledged in a statement that it has Bronfman’s proposal in hand, and extended the go-shop period — for Bronfman only — through Sept. 5. It will expire at 11:59 pm ET tonight for any other potential bidders.“There can be no assurance this process will result in a Superior Proposal. The Company does not intend to disclose further developments unless and until it determines such disclosure is appropriate or is otherwise required,” the committee said.The committee had apparently tried to drum up a bit more interest, saying that during the go-shop period, “representatives of the Special Committee contacted more than 50 third parties to determine whether they had an interest in making a proposal to acquire Paramount.”Bronfman originally submitted a bid worth $4.3 billion on Monday night. The updated version includes $1.7 billion to cash out some of Paramount’s shareholders.Bronfman’s bid includes the $400 million kill fee which Skydance stipulated should Paramount opt to go with another suitor.The decision to extend came just hours before the midnight deadline. Par’s special board committee, which has met several times today, will now be taking a very close look at the bid from the heir to the Seagram liquor fortune and former media executive.Bronfman assembled about 20 investors, from funds to high net worth individuals and financiers for a $4.3 billion package. Former child actor turned crypto magnate Brock Pierce and Kazakh businessman Nurali Aliyev, who were in the initial consortium, are no longer part of the group.Charles Phillips, the head of Paramount’s special board committee tasked with evaluating offers, is said to have nudged Bronfman’s bid along. It’s the latest frustration for Skydance, whose circa $8 billion merger agreement with Paramount unveiled July 7 included a 15-day extension to explore a rival bid, and another 15 days to nail it down.If it gets that far, Skydance would have the right to counter. However, the two deals are structurally very different.Both Skydance and Bronfman agreed to pay Shari Redstone $2.4 billion for her controlling stake in Paramount through special Class A voting shares. Both parties also plan to inject $1.5 billion to help Par shore up its finances and pay down debt. If Bronfman somehow emerges the winner, he’d owe Skydance a $400 million breakup fee.A big difference is that David Ellison’s Skydance plans to spend $4.5 billion to buy out the few Class A holders besides Redstone, and about half of the much more numerous Class B shares at, respectively, $23 and $15 a share. That’s a premium to the current share price and stockholders like it.Bronfman has now also added funds to cash-out Class A stockholders at $24 a share and a smaller number of of Class Bs at $16. Interestingly, Deadline hears that he made it clear in his revised offer that he prefers that the additional $1.7 billion to go to shareholders, he is leaving the specifics of how it is spent up to Paramount’s discretion.A big structural element in Skydance-Paramount is an actual merger — Par buying Skydance in a $4.75 billion all-stock deal. Shareholders don’t love that, calling it a very high valuation for Skydance, and one that that will dilute their holdings.However, at the end of the day, they acknowledge, Paramount will be a new, bigger company with deeper content and tech chops backed by Oracle co-founder Larry Ellison, one of the world’s richest men. Gerry Cardinale’s RedBird Capital is a major investor as well. Jeff Shell would run the combined company under Ellison.Wall Street has been a bit mystified by what feels like an uphill fight for Bronfman.“This is a narrative runs counter to wanting to leave Paramount in the safe hands of a family that has the balance sheet to nurture and properly invest in Paramount’s assets for decades to come,” said Rich Greenfield of Lightshed Partners.Redstone first began mulling various M&A options late in 2023, as the exigencies of funding a major streaming operation while also managing a portfolio filled with challenged TV and film assets became fully apparent. Paramount stock also had sunk to less than one-third of its value as of December 2019, which is when the merger of Viacom and CBS closed, creating Paramount Global.The process of landing on a buyer has traveled a winding road in the nine months or so from the time the first serious discussions were held. A number of major players, from Warner Bros. Discovery’s David Zaslav to Barry Diller to private equity giant Apollo Global Management and Sony Pictures Entertainment, joined the chase. After Skydance and Paramount announced their proposed combination in July, most suitors dropped their pursuits.The dual-class structure of Paramount, along with the fact that Redstone has controlled nearly 80% of Class A shares but just 10% of the company’s total equity, created headaches for dealmakers. Skydance revised its offer multiple times and was poised to announce an agreement with Paramount in June, only to have Redstone withdraw at the 11th hour.Along the road to a new corporate configuration, running the company has also proven to be a more complex undertaking. Bob Bakish, a onetime favorite of Redstone who was appointed CEO of Viacom in 2015 and then led Paramount starting in 2019, fell out with her over his concerns about the Skydance deal and was ousted last April. An “Office of the CEO” consisting of veteran execs George Cheeks, Chris McCarthy and Brian Robbins, was put in place. The trio then announced dramatic cutbacks, including $500 million in annual cost reductions and the layoff of 15% of the company’s U.S. workforce.In addition to the belt-tightening, Paramount also acknowledged a fundamental shift in the media empire it had assembled over decades, from the time when Shari’s father, Sumner Redstone, was running the company. It booked a $6 billion write down on its cable networks, acknowledging the wages of cord-cutting and changes in viewer habit. Flagship streaming service Paramount+, meanwhile, showed a profit in the most recent quarter, with full-year profitability the goal by 2025. The outlet also shed 2.8 million subscribers in the quarter, however, due to the end of a “hard-bundle” deal in South Korea, illustrating the challenge of building a global direct-to-consumer service capable of competing against Netflix.The co-CEOs told Wall Street analysts on the quarterly earnings call that it was “business as usual” despite the merger saga unfolding on the top level. They have said they will be given the latitude to pursue strategic transactions during this interim period. Especially on the international front, McCarthy said on the quarterly call that the leadership would take a “thoughtful approach.” Options, he said, include “strategic partnerships with maybe platforms who already have a great tremendous amount of reach and a platform, in which case we’ll be reducing our cost by not having to have our own platform.”Another scenario could be “a joint venture with one or more SVOD players, in which case we could get greater scale, increase long-term value, and drive greater profits.” The company is already a partner with NBCUniversal in Sky Showtime, a JV operating in more than a dozen territories across Europe.
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