Shock Twist: Bronfman Exits Paramount Bid! Skydance in Line for Major Win!

Edgar Bronfman Jr., the billionaire entertainment tycoon, has stepped away from his ambitious endeavor to take control of Paramount Global, making way for David Ellison’s Skydance Media to secure the victory.

On Monday evening, the chief independent director of Paramount declared the company auction had concluded, and the takeover by Skydance was set to progress. If Skydance secures federal regulators’ endorsement, Ellison and his team could be in control within roughly a year.

“Our Special Committee, after nearly eight months of scrutinizing viable opportunities for Paramount, maintains its belief that our agreement with Skydance offers immediate value and the potential for future value growth in a rapidly changing industry,” stated Charles E. Phillips Jr., the chair of Paramount’s special committee.

This development comes shortly after Phillips and other independent directors extended the “go shop” period deadline to review Bronfman’s $6 billion offer to buy the Redstone family’s investment firm, National Amusements Inc., and additionally provide a $1.5 billion cash injection to support the struggling media corporation.

Bronfman announced, “This evening, our bidding group informed the special committee of our withdrawal from the go-shop process. It was a privilege to participate in this opportunity. We still regard Paramount Global as an exceptional company, boasting a matchless collection of top-tier brands, resources, and personnel.”

The reason behind Bronfman’s early exit before Paramount’s September 5 deadline for independent board members to select the winning bidder for the beleaguered media company—which owns CBS, Comedy Central, Nickelodeon, MTV, and the historic Melrose Avenue film studio—is unclear. The special committee was set to examine Bronfman’s proposal this week.

However, there were indications that Bronfman’s offer would not stack up to Skydance Media’s $8.4 billion offer, which Paramount’s board and controlling shareholder Shari Redstone approved in July.

Ellison’s Skydance bid, backed by his billionaire father Larry Ellison and Redbird Capital Partners, held several advantages.

Not only were the financial terms more substantial, but Ellison had an early start over other potential bidders. The tech heir initially approached Redstone last summer to express his interest in buying out her family and investing in the company that her father managed for many years under the name Viacom. The board members of Paramount began considering Ellison’s deal in December.

Bronfman may have chosen to withdraw before the special committee formally reached its decision to save himself and his fellow investors from the embarrassment of rejection in the high-profile auction.

Phillips expressed gratitude to Bronfman and his investor group for their interest and efforts on behalf of the Special Committee.

Paramount executives chose not to comment late Monday. However, last week, the special committee stated that Bronfman’s bid would be the only offer beyond Skydance’s that the board would contemplate. The bidding window for all other bidders closed on August 21.

Bronfman’s decision also eases some tension in Paramount’s process.

Just last week, Skydance expressed dissatisfaction after the special committee members extended the go-shop deadline for Bronfman.

Lawyers for Skydance accused the committee of violating the terms of Skydance’s agreement to purchase National Amusements and Paramount in a letter to Paramount’s special committee, according to those privy to the situation.

“Despite any differences, we believe that everyone involved in the sale process shares the belief that Paramount’s best days are yet to come,” Bronfman stated. “We congratulate the Skydance team and thank the special committee and the Redstone family for their engagement during the go-shop process.”

The former leading executive of Seagram and Warner Music attempted to capitalize on a clause in the Skydance agreement that established a 45-day window for Paramount’s board to solicit offers superior to that of Skydance.

Bronfman delivered his proposal to Phillips, Paramount’s lead independent director, on August 19, after weeks of assembling a group of investors.

Bronfman’s main argument was that his group’s takeover would be simpler and hence more beneficial for Paramount shareholders than Ellison’s deal. His proposal closely resembled the Skydance offer.

Bronfman pledged to match Skydance’s proposal to buy National Amusements for $2.4 billion. After paying off the firm’s debts of approximately $650 million, the Redstone family would net $1.75 billion.

Both bids promised to infuse $1.5 billion into Paramount’s bruised balance sheet, allowing the company to reduce debt once the deal closes. Federal regulators must give their approval, a process estimated to take about a year.

However, Skydance had the advantage of a key component that helped it secure Paramount’s board’s support. Skydance proposed to allot $4.5 billion to purchase shares from Paramount investors, including nonvoting Class B shares at $15 a share, last spring.

Bronfman hustled to identify funds, proposing a $1.7-billion reserve, to offer Class B investors $16 a share.

His bid also would have covered the $400-million breakup fee owed to Skydance if Paramount favored Bronfman’s bid.

Bronfman’s proposal aimed to eliminate a contentious step in the Ellison deal, where Ellison merged his Santa Monica-based Skydance company with Paramount.

Some Paramount shareholders have expressed displeasure over the $4.75-billion valuation of Skydance, claiming the entertainment firm is not worth nearly that much. Skydance shares ownership of some of Paramount studio’s biggest hits, including “Mission: Impossible,” “Top Gun: Maverick,” and “Star Trek.” Ellison’s company has also been developing an animation studio under John Lasseter, former Pixar creative executive.

Several sources speculated that Paramount’s board’s willingness to consider Bronfman’s proposal stemmed from Redstone’s desire to shield her family from expensive shareholder lawsuits.

The sales process has already instigated litigation, and Paramount directors’ efforts to seek out other bids seemed designed to demonstrate that Skydance was the only feasible bidder.

Paramount announced late Monday that representatives of the special committee had contacted “more than 50 third parties to determine whether they had an interest in making a proposal to acquire Paramount.” However, there were no other interested parties.

On Tuesday, Paramount shares dropped 7% to $10.52.