KEY POINTS
- Skydance reportedly accused Paramount of breaching its existing acquisition deal
- Paramount's 'go-shop' deadline was supposed to end Wednesday, but it was extended through Sept. 5
- Skydance has offered to buy Paramount for $8.4B, while Bronfman offers an acquisition for $6B
Skydance Media has accused mass media conglomerate Paramount Global's special committee of directors of breaching the terms of its deal by extending its engagement period with other bidders and has demanded that Paramount end its negotiations with Edgar Bronfman Jr.
On Thursday, Bronfman hiked his bid to acquire Paramount from his initial offer of $4.3 billion to $6 billion. Specifically, Bronfman wants to purchase National Amusements, Paramount's controlling shareholder. He also wants to buy a minority stake in Paramount itself.
Later in the day, the Wall Street Journal reported that Skydance accused the media giant of violating its planned acquisition deal, citing a letter from Skydance's attorneys as seen by the outlet.
The letter came after Paramount said Wednesday that its special board committee extended the "go-shop" period deadline through Sept. 5 following Bronfman's upgrade to his acquisition bid, suggesting that the conglomerate was keeping the buyout door open for Bronfman. The negotiation period with other bidders was supposed to end Wednesday.
"While Skydance is not currently exercising its right to terminate the transaction agreement, we reserve the right to do so in the future," Skydance attorneys said in the letter, as per WSJ.
Bronfman's offer threatens Skydance's existing acquisition deal with Paramount, but it has yet to match the offer of Skydance, which stands at $8.4 billion. If the entertainment giant accepts Bronfman's offer or that of a new bidder that doesn't match the one Skydance presented, Paramount will have to pay a staggering $400 million break-up fee.
David Ellison's Skydance and Paramount announced in July that they are merging, with Paramount's non-executive chair Shari Redstone agreeing to relinquish the family's controlling stake under a complex transaction that will ultimately lead to the merger.
Paramount has lost nearly $17 billion in market value over the last five years amid rising innovations in the entertainment and media industries, and traditional television revenues plunging.
Interestingly, Bronfman's offer is deemed a better option, as it doesn't include the multi-step transaction Skydance seeks for the acquisition.
