In the latest development in the Paramount Global mergers and acquisitions saga, Skydance Media alleges the media company violated the terms of its merger agreement by taking on a $6 billion rival bid from investors led by billionaire Edgar Bronfman Jr.
Lawyers for David Ellison’s Skydance sent a letter Thursday to Paramount’s special committee to evaluate mergers and acquisitions, accusing the committee of violating the terms of the deal by extending the negotiation period to consider Bronfman’s offer — and threatening to withdraw their more than $8 billion proposal, according to the Wall Street Journal. Skydance’s legal team is demanding that Paramount end its negotiations with Bronfman’s group.
According to the report, Skydance’s letter to Paramount’s special committee stated: “Paramount has committed a material and irremediable breach of the Transaction Agreement.” According to the newspaper, the letter also stated: “While Skydance does not currently exercise its right to terminate the Transaction Agreement, we reserve the right to do so in the future.”
Accessed by diverseRepresentatives for Skydance, Bronfman and the Special Committee of Paramount's Board of Directors declined to comment.
On Wednesday, the Bronfman-led investor group made a $6 billion offer — up from its initial $4.3 billion bid — to buy Shari Redstone’s National Amusements Inc. and buy a minority stake in Paramount Global from nonvoting shareholders. In response, a special committee of Paramount’s board of directors extended its shopping period for bids that credibly compete with Skydance’s by 15 days, to Sept. 5.
On July 7, after months of on-and-off talks, Skydance and its financial partner Red Bird Capital Partners, in conjunction with NAI and Paramount Global, announced a binding agreement that would see Skydance buy out NAI (which owns 77% of the voting power in Paramount Global) and then merge with Paramount. Under the terms of the deal, Paramount would be required to pay a $400 million termination fee to Skydance-Red Bird if the media company opted to go ahead with a “superior” offer; the Bronfman consortium’s offer includes $400 million toward that fee.
Under the agreement reached by Skydance-RedBird, NAI and Paramount, the Paramount board’s special committee has 45 days (until August 21) during which it is allowed to “actively explore and evaluate alternative acquisition proposals.” If Paramount enters into discussions with a potential bidder that the board’s special committee determines “in good faith would reasonably or reasonably be expected to result in a superior proposal,” the company has the right to extend the discussion period until September 5, 2024.
(Image above: Skydance Media CEO David Ellison)
