Bronfman Jr Gathers $5.5bn, Is This The Last-Ditch Effort To Snatch Paramount Global

Edgar Bronfman Jr has secured up to $5.5bn to enhance a last-minute bid for Paramount Global, aiming to disrupt the media giant’s agreed deal with Skydance Media. Sources familiar with the matter revealed that the billionaire made an initial bid of $4.3bn on Monday, just before Paramount’s 45-day “go shop” period was set to expire on Wednesday.

The former Warner Music CEO is expected to sweeten his offer in the coming days, after garnering more financial backing from a diverse group of investors, according to sources. Among these backers are Fortress, a firm majority-owned by Abu Dhabi’s Mubadala investment arm, and private investment group BC Partners Credit. Film producer Steven Paul, cryptocurrency entrepreneur Brock Pierce, and Nurali Aliyev, the tech entrepreneur and grandson of Kazakhstan’s former ruler, are also reportedly involved.

Neither Bronfman, Skydance, Fortress, nor BC Partners Credit provided any comment on the developments. Attempts to reach Paramount, Paul, Pierce, and Aliyev for their responses were unsuccessful.

Despite the substantial commitments already secured, Bronfman’s team is reportedly still seeking additional funds. The inclusion of foreign investors in this bid could draw scrutiny from the Committee on Foreign Investment in the United States (Cfius), which evaluates deals for national security risks. Paramount’s ownership of CBS News, which may have specific restrictions on foreign ownership, could complicate the deal.

In a letter to a special committee of Paramount directors on Monday, Bronfman’s investor group argued that their proposal presents a better outcome for Paramount shareholders than the Skydance deal. The letter claimed that Bronfman’s bid would eliminate the risks and costs associated with merging Paramount with Skydance. However, it did not address how the group intends to tackle potential concerns from Cfius.

It remains unclear how the special committee, led by director Charles Phillips, will respond to Bronfman’s revised offer. Several insiders, including current and former board members, suggested that Phillips has previously attempted to block the Skydance deal.

This move by Bronfman is the latest twist in the ongoing saga over Paramount Pictures, the 98-year-old studio known for producing legendary films like The Godfather and Titanic. Skydance, founded by billionaire David Ellison, had already agreed to a deal with Paramount in July but allowed the company until August 21 to entertain higher offers.

Skydance’s offer, valued at more than $8bn, included an initial payment of $2.4bn to buy out Shari Redstone’s National Amusements (NAI), which controls 80% of Paramount’s voting power despite owning only about 10% of the company through special voting shares. After that, Skydance proposed a $4.5bn merger with Paramount, offering $15 per share to buy out up to half of the non-voting stock and injecting $1.5bn into Paramount’s balance sheet.

Bronfman’s initial offer reportedly valued NAI at $2.4bn, including debt, and matched Skydance’s proposed $1.5bn cash injection into Paramount. Additionally, Bronfman proposed to pay Ellison’s company $400m to terminate its existing deal. However, his initial bid lacked a clear offer for Paramount’s non-voting shareholders, a gap he is expected to address in his improved bid.

Advising Bronfman on the financial terms of the deal are Perella Weinberg Partners, UBS, and Rockefeller Capital Management, with legal advice provided by Skadden. Skydance, backed by US private equity group RedBird Capital and David Ellison’s father, Oracle co-founder Larry Ellison, is likely to argue that Bronfman’s bid offers little to Paramount’s shareholders while giving him full control of the company.

Bronfman is expected to counter this by arguing that his offer would result in less dilution of Paramount’s existing shareholders compared to the Skydance proposal.

The Wall Street Journal was the first to report Bronfman’s $4.3bn bid on Tuesday. As the situation develops, the battle for Paramount continues to intensify, with the future of one of Hollywood’s last major studios hanging in the balance.