Former Seagram and Warner Music executive Edgar Bronfman Jr. continued his 11th-hour pursuit of Paramount Global, increasing his offer to $6 billion for the Redstone family’s investment firm and the historic studio, according to three people close to the matter were not authorized to comment.
The latest twist in in the chaotic auction came late Wednesday as Paramount’s independent board members were mulling whether to keep the door open for Bronfman’s bid for the struggling company that owns CBS, Comedy Central, Nickelodeon, Showtime and namesake Hollywood movie studio.
The frenetic activity comes six weeks after Paramount accepted media executive David Ellison’s $8.4-billion, two-phased takeover of the Redstone’s family investment vehicle, National Amusements Inc., and Paramount.
Bronfman is trying to thread a needle created by a provision in Ellison’s Skydance Media deal, which was approved in early July by Paramount board members and controlling shareholder Shari Redstone. That provision carved out a 45-day “go shop” period designed to allow rival bidders to step up with “superior” proposals, according to a regulatory filing.
The Bronfman group’s earlier $4.3 billion offer emerged Monday, on the 43rd day.
Now, Paramount’s board’s Special Committee of independent directors must decide whether they want to extend the deadline to early September to dig into the details of Bronfman’s bid and scrutinize the strength of his investor group’s financing. The board committee must make a decision on whether to switch gears to pursue a transaction with Bronfman instead of going forward with Skydance.
People close to the process said the 69-year-old billionaire heir of the Seagram liquor fortune faces an uphill battle to dislodge Ellison, the son of billionaire Larry Ellison, who has contributed part of that family’s fortune into Skydance’s bid for National Amusements and Paramount.
Bronfman has worked for months behind the scenes to put together a bid for NAI and Paramount. But earlier this summer he fell short, prompting Shari Redstone to accept Skydance’s sweetened offer for National Amusements and Paramount in July.
Skydance Media founder David Ellison. (Photo by Evan Agostini/Invision/AP)
(Evan Agostini/Evan Agostini/Invision/AP)
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.
Bronfman, in his letter to Paramount’s Special Committee Chairman Charles E. Phillips, Jr., said his group would like to set up a fund to buy out some Class B shareholders.
The WSJ reported the new bid gives some non-Redstone, nonvoting Paramount shareholders an option to sell their shares for $16.
Compensation for Class B shareholders has been a critical issue. Paramount board members have worked to demonstrate that they have been fulfilling their fiduciary duty of looking out for the interests of all shareholders, not just voting Class A shareholders, including the Redstone family, which owns 77% of the controlling shares.
Some shareholders have expressed dismay over Ellison’s multi-phased deal, primarily his plan to fold his Santa Monica studio, Skydance, into Paramount. The deal assigns a valuation of $4.75 billion for Skydance, which co-owns some of Paramount’s biggest franchises, including “Top Gun: Maverick,” “Transformers,” “Mission: Impossible,” “Reacher” and “Star Trek.”
Both Skydance and Bronfman’s proposals would buy out the Redstones’ NAI for $2.4 billion. After paying off the firm’s debt, the family would come away with about $1.75 billion.
Bronfman has been a major figure in Hollywood for decades.
He formerly led Universal Studios, and later Warner Music, and currently serves as executive chairman of FuboTV, which last week won a major court victory over Walt Disney Co., Warner Bros. Discovery and Fox Corp. Citing anti-trust concerns, a federal judge in New York halted, at least temporarily, the launch of the companies’ joint venture to create a sports-centric streaming service called Venu.
This spring, Bronfman stuggled to put together a bid with financing from Bain Capital, according to people familiar with the process but not authorized to comment. Bain ultimately took a pass, leaving Bronfman without a firm offer at a pivotal time during the auction.
Although Redstone temporarily soured on Skydance’s bid, her other suitors failed to show they had the financing.
Bronfman began recruiting a group of individual investors that includes former Fox and AOL executive Jon Miller; Atlas Comics investor Steven Paul; former “Mighty Ducks” actor Brock Pierce; and John Martin, former chief financial officer of Time Warner.
The group raced to put together a proposal with enough heft to be considered by the Special Committee by this week’s deadline.
The late Sumner Redstone, left, with daughter Shari Ellin Redstone in 2012.
(Katy Winn/Katy Winn/Invision/AP)
“We believe Shari Redstone philosophically prefers the concept of merging with Skydance given [the Ellison family’s wealth and because] Skydance has no plans of breaking up the company (for now),” Raymond James media analysts Ric Prentiss and Brent Penter wrote in a report this week.
But the 70-year-old mogul has a cordial relationship with Bronfman, according to people close to the process. Both are members of prominent dynasties and the two travel in some of the same New York media circles. And one of her longtime advisers, Miller, is a key member of the Bronfman investment group. Miller was a partner in Redstone’s boutique investment firm, Advancit Capital.
Even if Bronfman’s bid falls short, the exercise could be a plus in defending against shareholder lawsuits. Paramount can argue the sales process was open to other bids.
Paramount shares closed up 1.4% to $11.09.
Staff writer Samantha Masunaga contributed to this wrereport.
