A battle over media giant Paramount Global Inc PARAPARAA could be intensifying with former Warner Music CEO Edgar Bronfman Jr. trying to outbid Skydance for control.
What Happened: Bronfman submitted a bid of $4.3 billion Monday night and plans to bid higher in the coming days as the deadline for Paramount bids approaches.
Skydance and National Amusements, which is the controlling shareholder of Paramount, previously agreed to a $28 billion merger that will launch a company called New Paramount. Under the terms of the deal, Paramount Class A shareholders (PARAA) will receive $23 per share, with Paramount Class B shareholders (PARA) getting $15 per share or one share of the newly created merged media company.
Bronfman’s bid, which was reported by The Wall Street Journal, was seen as a placeholder to meet a deadline with a larger bid coming. Axios reported Tuesday that Bronfman has raised $5.5 billion to help with his bid for National Amusements.
Bronfman has vast experience in the media industry and currently serves as the Executive Chairman of FuboTV Inc FUBO. His plan to turnaround Paramount has not been made public, but reports link him to potentially assuming the CEO role of the new company.
The new financing from Bronfman comes from various investors and family offices. The Wall Street Journal initially reported that streaming company Roku Inc ROKU was also approached to help with the buyout bid, but it is unclear if they were part of the final financing.
Why It's Important: The initial talks between Skydance and National Amusements began back in December 2023 and the process has been long with several potential suitors reported before Skydance won the deal.
While Bronfman's potential $5.5 billion raised offer would fall short of Skydance's $8 billion bid, it avoids the $4.5 billion valuation tied to Skydance Media and the dilution concerns for existing Paramount shareholders.
The initial $4.3 billion bid from Bronfman included $2.4 billion for National Amusements, $1.5 billion for Paramount to add to its balance sheet and pay down debt. The bid also includes $400 million to pay the Skydance breakup fee.
One major difference is Bronfman’s bid didn't include a cash out offer for Class B shareholders.
The current go-shop period ends on Aug. 21 for Paramount but could be extended if it has a serious counteroffer to consider. Paramount would be on the hook for a reported $400 million breakup fee to Skydance if it walks away from the previously agreed upon merger.
PARA, PARAA Price Action: Paramount (Class B) shares trade at $10.91 versus a 52-week trading range of $9.54 to $17.50. The shares are down 27% year-to-date in 2024.
Paramount (Class A) shares trade at $22.95 versus a 52-week trading range of $13.40 to $26.31. The shares are up 17% year-to-date in 2024.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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